With oil prices enjoying a powerful renaissance in recent months amid mounting supply concerns, declining inventory and the growing possibility that China’s economy may finally kickstart, energy giants such as Exxon and Chevron had enjoyed a similar rebound in their stock price, and in fact XOM hit a record high as recently as 2 weeks ago. Which is why many were looking to today’s earnings reports by the largest US energy company to see if the numbers would validate the rebound in sentiment and, of course, price.

So here is what Exxon reported today for the first quarter:

EPS of $2.06, down from 2.83 a year ago, and missing consensus estimates of $2.19, as a result of delayed bump in commodity prices (which however will lift results in Q2) and a spike in non-cash charges

The Net Income number was $8.22 billion, down from $11.618 billion a year ago, with weakness in Upstream and Energy products hitting the bottom line number, coupled with an increases in expenses.  The biggest factor behind the drop in earnings was a $2.6 billion hit to price/margin due to lower energy prices in Q1. However, with Brent now well above year ago levels and rising, what XOM lost in Q1 it will more than make up in Q2 absent a collapse in the energy market.

A breakdown by the various operating segments, reveals that price and margin were indeed the biggest culprits for declining earnings.

Taking a closer look at the company’s two main divisions, Upstream and Energy products, the company provided the following detail for the somewhat disappointing earnings here:

Starting with Upstream:

Lower gas realizations due to high industry inventory
Advantaged assets volume improved due to continued growth in Guyana
>600 Kbd of Guyana quarterly gross production
Payara ramped up to 220 Kbd capacity well ahead of schedule

Base volume lower due to unfavorable sales timing and entitlement impacts
Timing effects had a negative $120 million impact on the quarter compared to a negative $160 million impact last quarter

Energy products, where we saw the bulk of the earnings delta (some $1.7BN in earnings reductions between Q4 and Q1), was more interesting as Exxon attributed the slide to three primary drivers:

Volumes and expenses reflect higher scheduled maintenance activity
Non-cash charges which reflected the absence of favorable year-end inventory impacts, and unfavorable tax adjustments
Finally, timing effects which had a negative $460 million impact on the quarter, consistent with rising price environment compared to a positive $600 million impact last quarter.

“Any given quarter we’ll have a number of non-cash, just a bit more unusual expenses that kind of ebb and flow,” CFO Kathy Mikells told BBG in an interview. “This quarter we had a number of small ones that added up together to be more significant and that’s difficult for analysts to model.”

“We continue to bring projects in more quickly and under budget so we’ve just had great execution in Guyana,” Mikells said, noting that gross daily production is now more than 600,000 barrels, up from 440,000 in the final three months of 2023.

Exxon’s accounting charges were non-cash items associated with tax and inventory balance sheet adjustments, Mikells said. The company also had higher expenses from scheduled maintenance at its facilities.

Some more highlights from the report:

Exxon started output at Payara, its third Guyanese development, ahead of schedule late last year, adding 220,000 barrels of daily supplies that earn profits even if crude plunges to the $35 mark.
Achieved quarterly gross production of more than 600,000 oil-equivalent barrels per day in Guyana and reached a final investment decision on the sixth major development.
Net production was 47,000 oil-equivalent barrels per day lower than the same quarter last year with the growth in advantaged Guyana volumes more than offsetting the earnings impact from lower base volumes due to divestments, government-mandated curtailments and unfavorable entitlement effects.
Excluding the impacts from divestments, entitlements, and government-mandated curtailments, net production grew 77,000 oil-equivalent barrels per day driven by the start-up of the Payara development in Guyana.

What is remarkable is that even though earnings missed mostly on the timing effect of commodity price increases and one-time charges, which has sent the stock tumbling this morning, the company still managed to blow away expectations for cash generation: in Q1, cash from operations jumped to $14.7 billion, $1 billion higher than Q4 2023 and also $1 billion higher than forecasts, boosted by the more than 35% uplift in Guyanese crude production.

This in turn led to a $1.8 billion increase in the company’s cash balance despite $6.8 billion in shareholders distributions including $3.8 billion in dividends.

Exxon’s capital spending was $5.8 billion in the first quarter, a third lower than the previous three month period when the company incurred some added Guyana costs. If that level of spending is repeated for the rest of the year, annual capital expenditure would come in at the low end of the company’s $23 billion to $25 billion guidance, and in a market where capital efficiency is extremely rewarded, it likely means that new all time highs are just weeks if not days away.

More importantly, XOM says that it is on pace to increase buybacks to $20 billion following the close of the Pioneer acquisition, some time in Q2.

Exxon’s stellar performance in Guyana explains why arch-rival Chevron wants to get into the project via a $53 billion takeover of Hess, which has a 30% stake. Exxon claims it has a right-of-first refusal over Hess’s stake while Chevron says that doesn’t apply because its deal is a corporate merger.

Arbitration is still in its “very early days,” Mikells said. Each side has chosen one arbitrator who will sit on a panel of three, she said. Hess this week extended the closing date of its deal with Chevron by six months to October.

Finally looking ahead, the company forecast that it is on track to more than double upstream profits by 2027…

… and with cost-savings expected to save another $5BN in spending by 2027 (a total of $15BN vs 2019), this translates into a stellar 10% CAGR in bottom line earnings, and about $10BN in incremental earnings potential by 2027.

So in its infinite wisdom, when faced with a company that is generating more cash than 99% of companies – and is not reliant on hype and chatbots to keep growing but good, old-fashioned energy which may be boring but is what keeps the world turning – this morning the algos decided to dump their Exxon shares sending the stock some 4% lower, and allowing anyone who pays attention to load up on the dip.

The XOM Q1 investor presentation is below (pdf link)

Having already lost more than 10% of its value versus the US dollar this year, the yen plunged further overnight after Bank of Japan Governor Kazuo Ueda indicated monetary policy will stay easy as he kept rates unchanged and showed little to no support for the embattled currency during the press conference.

While investors had not expected the BoJ to change its policy this week, there was an expectations that Ueda would strike a hawkish tone regarding future rate rises to slow the yen’s decline.

Instead, Ueda said at a news conference on Friday that the central bank’s board members judged there was “no major impact” from the weaker yen on underlying inflation for now.

“Currency rates is not a target of monetary policy to directly control,” he said.

“But currency volatility could be an important factor in impacting the economy and prices. If the impact on underlying inflation becomes too big to ignore, it may be a reason to adjust monetary policy.”

And that sent the currency reeling (amid chaotic swings) back above 157/USD…

Source: Bloomberg

“There is no intention by the BoJ to stop the yen’s decline, at least looking at its statement and its outlook report,” said UBS economist Masamichi Adachi.

“The finance ministry will have to act [to stem the yen weakness]… It would have been more effective if both the government and the BoJ faced the same direction,” he added.

Blowing further below the ‘interventionist’ levels seen previously to a fresh 34-year low…

Source: Bloomberg

“Markets remain on high alert for any indication of whether the yen’s current weakness will be interpreted as a lasting inflationary signal,” said Naomi Fink, global strategist at Nikko Asset Management.

“The BoJ however is likelier to find any knock-on impact from yen weakness upon inflation as more concerning than short-term currency moves.”

Driving the depreciation is the yawning gap between the interest rates in the US – which are at highest in decades after the Fed’s aggressive tightening cycle last year – and those in Japan, where borrowing costs remain stubbornly low near zero.

“Intervention is possible at anytime, but it could have been just someone selling a large lot, which stoked intervention speculation and spurred follow-through moves,” said Koji Fukaya, a fellow at Market Risk Advisory Co. in Tokyo.

“It does not look like intervention, but the only way to confirm is to check data that will be released later by the Ministry of Finance.”

Policymakers have repeatedly warned that depreciation won’t be tolerated if it goes too far too fast.

Finance Minister Shunichi Suzuki reiterated after the BoJ meeting that the government will respond appropriately to foreign exchange moves.

Potential triggers for interventions are public holidays in Japan on Monday and Friday next week, which bring the risk of volatility amid thin trading.

“Should the yen fall further from here, like after the BOJ decision in September 2022, the possibility of intervention will increase,” said Hirofumi Suzuki, chief currency strategist at Sumitomo Mitsui Banking Corp.

“It is not the level but it’s the speed that will trigger the action.”

But so far, nothing! And so the market continues to call Ueda and Suzuki’s bluff, knowing full well that a sudden intervention will perhaps briefly support the currency but will pancake the current gains in Japanese stocks.

However, not everyone is convinced intervention is imminent.

In a note this morning, Deutsche Bank says the currency’s decline is warranted and finally marks the day where the market realizes that Japan is following a policy of benign neglect for the yen.

We have long argued that FX intervention is not credible and the toning down of verbal jawboning from the finance minister overnight is on balance a positive from a credibility perspective. The possibility of intervention can’t be ruled out if the market turns disorderly, but it is also notable that Governor Ueda played down the importance of the yen in his press conference today as well as signalling no urgency to hike rates. We would frame the ongoing yen collapse around the following points.

Yen weakness is simply not that bad for Japan. The tourism sector is booming, profit margins on the Nikkei are soaring and exporter competitiveness is increasing. True, the cost of imported items is going up. But growth is fine, the government is helping offset some of the cost via subsidies and core inflation is not accelerating. Most importantly, the Japanese are huge foreign asset owners via Japan’s positive net international investment position. Yen weakness therefore leads to huge capital gains on foreign bonds and equities, most easily summarized in the observation that the government pension fund (GPIF) has roughly made more profits over the last two years than the last twenty years combined.

There simply isn’t an inflation problem. Japan’s core CPI is around 2% and has been decelerating in recent months. The Tokyo CPI overnight was 1.7% excluding one-off effects. To be sure, inflation may well accelerate again helped by FX weakness and high wage growth. But the starting point of inflation is entirely different to the post-COVID hiking cycles of the Fed and ECB. By extension, the inflation pain is far less and the urgency to hike far less too. No where is this more obvious than the fact that Japanese consumer confidence are close to their cycle highs.

Negative real rates are great. There is a huge attraction to running negative real rates for the consolidated government balance sheet. As we demonstrated last year, it creates fiscal space via a $20 trillion carry trade while also generating asset gains for Japan’s wealthy voting base. This encourages the persistent domestic capital outflows we have been highlighting as a key driver of yen weakness over the last year and that have pushed Japan’s broad basic balance to being one of the weakest in the world. It is not speculators that are weakening the yen but the Japanese themselves.

The bottom line, Deutscxhe concludes, is that for the JPY to turn stronger the Japanese need to unwind their carry trade. But for this to make sense the Bank of Japan needs to engineer an expedited hiking cycle similar to the post-COVID experiences of other central banks. Time will tell if the BoJ is moving too slow and generating a policy mistake. A shift in BoJ inflation forecasts to well above 2% over their forecast horizon would be the clearest signal of a shift in reaction function. But this isn’t happening now.

The Japanese are enjoying the ride.

But there is potential for yen upside as Bloomberg’s Simon White notes that profit taking on foreign asset positions might soon prompt some yen repatriation and pressure USD/JPY lower.

If it is perceived that the yen won’t get much cheaper due to intervention risk, domestic investors might choose to start switching some of their US equity positions back to the domestic market, repatriating yen and pressuring USD/JPY lower in the process.

The chart below shows that on the year, the Nasdaq in yen terms and the Nikkei are both up by the same 13%-14% on the year. A stronger yen would present an ongoing headwind to the US position.

Equity positions are typically less FX hedged than bond positions, meaning that the repatriation of the currency is not neutered by the unwind of the hedge.

The dynamics of spot trading, options barriers and potential intervention as well as US PCE data released later today will dominate the currency’s short-term gyrations, but the slightly longer-term considerations of profit taking on foreign positions will start to drive the medium-term outlook.

Once that trend establishes itself, longer-term drivers of the yen will come into focus. Japan is the world’s largest net creditor, and there is a significant structural short in the yen.

The country’s net international investment position is $3.3 trillion, but its net position in portfolio assets, i.e. so-called hot flows that could be liquidated quickly, is $4.4 trillion.

Only a fraction of that being repatriated has significant potential to drive the yen considerably higher.

The question is, how much pain is China willing to take from its regional neighbor’s ‘devaluation’?

Authored by Simon White, Bloomberg macro strategist,

Gold trading in China has exploded and stocks of copper have risen sharply prompting speculation that policymakers are on the brink of a yuan devaluation. Even though it’s still a tail-risk, it’s one requiring greater vigilance as the economy becomes increasingly deflationary, redoubling capital outflow pressures.

The yuan has been steadily falling versus the dollar this year. So far the decline has been measured, but activity in commodities has prompted conjecture that China is about to orchestrate a significant one-off yuan devaluation. Futures gold trading in China has moved sharply higher, and the net long position has been rising.

Also, there has been a sharp rise in China’s copper stocks. Copper as well as other commodities is used as a source of collateral in China.

USD/CNY has been bumping up against the upper band of the PBOC’s fix for the currency pair.

China has a nominally closed capital account, but it is de facto leaky. Capital outflow is rising, and this puts further pressure on the economy as it has a geared negative effect on domestic liquidity.

Allowing the yuan to depreciate against the dollar (it is appreciating against most other currencies) takes some of the pressure off.

China, though, has been unofficially intervening, via the state banks, to stabilize the yuan’s fall.

Nonetheless, it is still less likely than not they will countenance a significant devaluation of the yuan versus the dollar.

First, it would compromise the financial stability that China has sought to obtain.

Second, it risks a tariff backlash from the US.

Third it may be counter-productive if it looks panicky and prompts even more capital outflow.

The stockpiling could well be for other reasons.

Rising global inflation risks (there is more to come, and even China will likely soon face consumer inflation);

reserve diversification in a more multi-polar world;

and raw materials for solar (AI needs a lot of energy) and EVs, and so on.

China planning for an invasion of Taiwan is another tail-risk that can’t be completely discounted.

Falling bond yields, though, show China is nearing a crunch point (read why here) and will need to do something soon to avert a debt deflation.

Even though a full-scale devaluation is less likely, it’s a non-negligible risk that can’t be ignored.

George Soros and his far-left movement is paying student agitators to co-opt and amplify anti-Israel protests at colleges across the country, the NY Post reports.

The protests, which began at Columbia University, have expanded nationwide – with copycat tent cities erected at colleges including Harvard, Yale, Berkeley in California, the Ohio State University and Emory in Georgia, with organized branches of the Soros-funded Students for Justice in Palestine (SJP) having organized them.

Biden has sparked a wildfire. pic.twitter.com/YXbHCKONcm

— Edward Snowden (@Snowden) April 25, 2024

Which might explain this:

Something odd about those campus tent encampments. Almost all the tents are identical – same design, same size, same fresh-out-of-the-box appearance. Which suggests that rather than an organic process, whereby students would bring a variety of individual tents, someone or some… pic.twitter.com/86JV5BD9NM

— Afshine Emrani MD FACC (@afshineemrani) April 23, 2024

The parent organization of SJP has been funded by a constellation of nonprofits which all lead to Soros.

At three colleges, the protests are being encouraged by paid radicals who are “fellows” of a Soros-funded group called the US Campaign for Palestinian Rights (USCPR).

USCPR provides up to $7,800 for its community-based fellows and between $2,880 and $3,660 for its campus-based “fellows” in return for spending eight hours a week organizing “campaigns led by Palestinian organizations.”

They are trained to “rise up, to revolution.”

The radical group received at least $300,000 from Soros’ Open Society Foundations since 2017 and also took in $355,000 from the Rockefeller Brothers Fund since 2019. -NY Post

The group has three “fellows” who have helped propel the protests into a nationwide phenomenon, which you can read more about here…

We’re sure if the protests get violent, prosecutors will take appropriate action, yes?

And while many of the protesters are just morons…

“I wish I was more educated.”

Video captured at New York University shows that some of the students protesting there have no idea why. Full reporthttps://t.co/iYSbhaxxEf pic.twitter.com/iqXpoZexiP

— m o d e r n i t y (@ModernityNews) April 25, 2024

Some of them are quite spicy, like the leader of Columbia’s encampment…

“Be glad — be grateful — that I’m not just going out and murdering Zionists. I’ve never murdered anyone in my life, and I *hope* to keep it that way.” This is a top leader of @Columbia’s encampment, with whom the school is “negotiating,” expanding on his thoughts about how Israel… pic.twitter.com/ugodO4O7M5

— Guy Benson (@guypbenson) April 25, 2024

Short-term inflation expectations rose… again… according to the latest UMich sentiment survey with 1-year expectations at 3.2% final, up from preliminary 3.1% for April, and 2.9% for March. This is the highest level since Nov 2023…

Source: Bloomberg

The headline sentiment also declined in April from three-year-highs. Consumers’ perceptions of their current financial situation and the economic outlook over the next year both slid to four-month lows. The current conditions gauge dropped to 79 from 82.5. A measure of expectations fell to 76 from 77.4.

Source: Bloomberg

While “consumers’ frustration over high prices in their day-to-day spending decisions grew this month, price concerns for large purchases – durable goods, vehicles, and homes – were all little changed from last month,’’ Joanne Hsu, director of the survey, said in a statement.

About 38% of consumers reported that high prices were weighing down their living standards, up from 33% who said so last month.

Sentiment gauges also provide insight into voters’ feelings about the economy and their finances leading up to the presidential election in November. President Joe Biden’s recent polling bump in key battleground states has mostly evaporated amid economic pessimism, the latest Bloomberg News/Morning Consult poll found.

“Consumers continue to express uncertainty about the future trajectory of the economy pending the outcomes of the upcoming election,” Hsu said.

Partisan differences in views of the economy remain pronounced. While Democrats and Independents saw little change in sentiment this month, sentiment for Republicans fell about 6 index points.

Republicans reported declines for four of the five components of the sentiment index, reflecting their deteriorating views across multiple facets of the economy. Despite these declines, sentiment for Republicans remains well above 2022 and 2023 levels.

In fact, the current reading for Republicans’ Expectations Index is the second highest (after last month) since the end of 2020, as the Trump presidency came to a close.

Authored by Michael Snyder via The Economic Collapse blog,

According to the absurd numbers that the government feeds us, the unemployment rate is very low and there are lots of jobs available.  But if what they are telling us is true, why are so many Americans not able to find work?  As you will see below, some people haven’t been hired even though they have literally applied for hundreds of jobs. 

There seems to be an enormous disconnect between what is actually happening in the real economy and the economic narrative that they are constantly pushing.  By the time you are done reading this article, I think that you will agree with me.

Earlier this week, I received an email from a reader that has not been able to find work after seven months of searching.

He gave me permission to share part of that email with you, and it is certainly quite heartbreaking…

Hi Michael,

I am a long-time reader of theeconomiccollapseblog.com, and your recent article comparing the economy to the movie “Weekend at Bernie’s” really stood out to me.

I’m really trying to figure out WHY it is so hard to find a job.

I was laid off from my job as a Custodial Foreman in September 2023, and have had ZERO results for my countless hours spent searching for comparable work.

I don’t know if you want to use any of this for an article or not, but if you do, please just keep doing what you normally do: Praising Jesus Christ. Without my faith in him I don’t know what I’d do.

When I wake up, I make coffee and turn on the computer and go through the state’s unemployment job search sites they provided me when I was laid off. I have been looking and also applying for jobs DAILY since September 2023. And these are not “rocket science” positions; I’m simply looking for Maintenance or Custodial or Groundskeeper type jobs. You know, “normal working class” type jobs.

But after ~300 applications (And these are all just to the jobs that I not only have experience for but also would actually want to do), I have had 1 interview. One interview in 7 months of applying and sending tailored cover letters with, daily!

If the economy is doing so “great”, why can’t he find employment?

Some of you may be tempted to think that he is just an isolated case.

Well, here is another example of an experienced worker that has applied for approximately 300 jobs without any success…

Royal Siu, who lives in Seattle and is trained as a pharmacist, likes to make his friends guess how many jobs he’s applied to. They’ll often toss out some number around 40, he told BI. He’ll tell them to keep going. Most give up by the time they reach 100. That’s when Siu drops that he’s applied to about 300 jobs. “It’s usually a shock factor to them,” he said.

Siu, who’s trying to use his pharmacy degree to work in other parts of healthcare, is finding it harder to land interviews than in a prior job search. The 28-year-old was getting more phone screenings and first and second interviews in the past. This time, it’s been a couple of months since he had a screening call. So he continues to turn to his network but also doesn’t stop applying.

What in the world is going on here?

I thought that there were “millions” of good jobs just waiting for someone to step into them.

Something definitely does not add up.

Even Americans with advanced degrees from top schools are increasingly finding themselves out of work.

If you doubt this, just check out these numbers…

Even at some top business schools, the number of recently minted M.B.A.s without jobs has roughly doubled from a couple of years ago, when U.S. companies were rushing to hire as many workers as they could, according to data from the schools.

At Harvard Business School, 20% of job-seeking 2023 M.B.A. graduates didn’t have one three months after graduation, up from 8% in 2021. At Stanford’s Graduate School of Business, 18% didn’t, compared with 9% in 2021. About 13% of those at the Massachusetts Institute of Technology’s Sloan School of Management didn’t have a job within three months, up from about 5% in 2021.

How are those numbers possible if the unemployment rate is hovering near “historic lows”?

Of course the truth is that we have been sold a lie.

If you do not have a job, you are classified by the U.S. government as either “unemployed” or “not in the labor force”.

In 2008 and 2009, the combined total of those two categories never even reached 90 million.

Today, the combined total of those two categories is over 106 million.

The Biden administration says that only 6,429,000 Americans are officially “unemployed”.

The other 99,989,000 Americans without a job are considered to be “not in the labor force”.

And more will be lumped into those two categories soon, because large employers all over the nation continue to conduct mass layoffs.

For example, thousands of Tesla workers in California and Texas were just notified that they will be losing their jobs…

The notifications in California and Texas, where the electric vehicle (EV) maker has large presences, came in the form of WARN notices, according to reports.

In California, the planned Tesla headcount reductions will hit approximately 3,300 workers, The San Francisco Standard reported Tuesday.

They will apparently occur at locations in a total of four different cities in the Golden State.

Meanwhile, Texas will see almost 2,700 employees in Austin lose their jobs, according to the Austin American-Statesman.

Sadly, the pace of layoffs is likely to increase during the months ahead, because business activity in the U.S. is declining…

The U.S. economy lost momentum in April, a pair of S&P surveys found, as businesses reported a decline in new orders and reduced employment for the first time since the pandemic.

The flash U.S. manufacturing purchasing managers index slipped to a four-month low of 49.9 in April from 51.9 in March.

The S&P flash U.S. services PMI fell to a five-month low of 50.9 this month from 51.7 in March.

The surveys are the first indicators of each month to give a sense of how the U.S. economy is performing.

Meanwhile, the cost of living crisis just continues to escalate.

Shockingly, at one station in California gasoline now costs $7.29 per gallon…

Soaring gas prices have skyrocketed to a whopping $7.29 per gallon in some parts of California – which is above the current the national hourly minimum wage.

While the average price for a gallon of gas varies from state to state – drivers in a certain Silicon Valley town are facing particularly extortionate rates that set them back almost $150 for a full tank.

The Chevron gas station in Menlo Park was exposed on Sunday by a bewildered customer who posted on X that the price per gallon was four cents ‘above the federal hourly minimum wage.’

If you think that this is bad, just wait until the war in the Middle East transforms into the apocalyptic conflict that I believe it will become.

I am entirely convinced that inflation will continue to be a major problem even as economic activity in the U.S. slows down even more.

We are already experiencing “stagflation”.

What is eventually coming will be so much worse than that.

Of course the economic pain that we are going through is just one of the factors that is systematically destroying our nation.

A Warning to America: 25 Ways the US is Being Destroyed | Explained in Under 2 Minutes pic.twitter.com/qwmBO8DmMt

— Western Lensman (@WesternLensman) April 22, 2024

Just about all of our major institutions are crumbling, just about every sector of our society is in the process of melting down, and conditions are rapidly getting worse all around us.

And now we are heading into the most chaotic election season in the entire history of our country.

This is a recipe for disaster, but there is no turning back now.

*  *  *

Michael’s new book entitled “Chaos” is available in paperback and for the Kindle on Amazon.com, and you can check out his new Substack newsletter right here.

The world’s largest global diversified miner, BHP, is being forced to significantly raise its buyout offer of Anglo American or walk away from the proposed all-share deal valued at £31.1 billion ($38.9 billion). 

“The BHP proposal is opportunistic and fails to value Anglo American’s prospects, while significantly diluting the relative value upside participation of Anglo American’s shareholders relative to BHP’s shareholders,” Anglo chairman Stuart Chambers wrote in a statement on Friday. 

Chambers continued, “The proposed structure is also highly unattractive, creating substantial uncertainty and execution risk borne almost entirely by Anglo American, its shareholders and its other stakeholders.”

The first indication that Anglo executives would reject the deal came Thursday afternoon when Reuters reported two sources familiar with talks with top Anglo investors who said the offer was ‘unattractive.’ 

Anglo owns massive copper mines in South America. The miner has become an acquisition target of BHP solely to create the world’s largest copper mining giant, with control of about 10% of the global copper mining supply. Copper mining supplies are dwindling, and demand is expected to soar as power grids worldwide are upgraded to support the green energy transition. 

The Financial Review quoted hedge fund manager Rafi Lamm of Melbourne’s L1 Capital as saying BHP would have to increase its bid for Anglo’s assets, which have been underappreciated by the market and make strategic sense for BHP. 

“We think it’s a sensible move by BHP and we think they can afford to pay the proposed deal pricing and a lot more,” Lamm said. 

James Whiteside, head of mining and metals corporate research at consultancy Wood Mackenzie, said BHP will have to raise its offer to bring its value “closer to the share price in 2023 before operational issues emerged.” 

On Thursday, BHP proposed an all-share deal valued at £31.1 billion ($38.9 billion). The transaction depends on Anglo spinning off its South African iron ore and platinum businesses to its shareholders. The offer is conditional and non-binding at £25.08 a share, or about a 14% premium to Anglo’s closing share price on Wednesday.

BHP investor Equity Trustees Asset Management told the Sydney Morning Herald that BHP’s bid to buy Anglo American made sense strategically, “but much will depend on what BHP will eventually pay.” 

“Having a bit more copper in the portfolio is a positive. If copper can move up from here this will likely offset any errors made in its purchase price of Anglo,” Equity Trustees head of equities Chris Haynes said.

Haynes added, “As we know, large acquisitions like this always have problems and will likely weigh on the BHP stock price in the short term.”

Shares in BHP fell on Friday, ending the Australian session at 4.6% lower.

Meanwhile, copper prices hit $10,000 a ton for the first time in two years, fueled by speculation of dwindling supplies and robust demand from the green energy transition. 

Copper bulls like BlackRock and Trafigura Group have said the base metal must move higher to spur new mine development. 

BofA recently warned, “The copper supply crisis is here.” 

Let’s not forget our note titled “The Next AI Trade,” which explains the investment opportunities in upgrading America’s grid as generative AI data centers increase power demand. 

And Jefferies is on it: “Copper Demand in Data Centers.” 

Recall billionaire mining investor Robert Friedland, who explained last year on Bloomberg TV that “copper prices might explode ten times.” 

Authored by Steve Watson via Modernity.news,

Video has emerged of a drag queen leading children barely older than toddler age in chanting “Free Palestine” during a so called “Queer Storytime for Palestine” event in Massachusetts.

The event, featuring a drag queen going by the name of ‘Lil Miss Hot Mess’, took place earlier this month at the Northampton Center for the Arts.

The event was advertised by the organisers as “dancing, celebrating Palestine culture, learning about queer heroes and doing arts and crafts.”

According to the hosts, Valley Families for Palestine, profits from the event were donated to alQaws, a Palestinian organisation that is “working for queer liberation.”

Video captured at the event shows ‘Hot Mess’ reading her book titled “If You’re a Drag Queen and You Know It,” and ordering the kids “If you’re a drag queen and you know it shout ‘Free Palestine.’”

Video has emerged of a drag queen leading children barely older than toddler age in chanting “Free Palestine” during a so called “Queer Storytime for Palestine” event in Massachusetts. Full report herehttps://t.co/RLzl7S1ZC2 pic.twitter.com/cbcnVkQh6I

— m o d e r n i t y (@ModernityNews) April 26, 2024

First off, gay people are at best severely disrespected, and at worst murdered in Gaza and other Palestinian areas. In terms of how gay-friendly it is, The LGBT Equality Index ranks Palestine as 192 out of 197 countries. Syria, Somalia and Yemen are ranked as more open to homosexuality.

It’s safe to say that a drag queen encouraging American kindergarteners to say ‘free Palestine’ is not really going to shift the needle as far as that situation is concerned.

Amherst, MA – Valley Families for Palestine puts on ‘Queer Storytime for Palestine’ in which toddlers are recorded chanting “Free Palestine”.

The harsh reality? Members of the LGBTQ+ community are often murdered in Gaza and other Palestinian areas such as Ramallah. pic.twitter.com/b8qwU4ycR3

— StopAntisemitism (@StopAntisemites) April 24, 2024

Secondly, these children are clearly being subjected to a double dose of ideological and political indoctrination.

What’s next? Queer Palestine vaccine furry Ukraine drag queen story time?

Who in their right minds are taking their kids to this kind of thing? What do they expect will come of it?

Some people don’t deserve to be parentspic.twitter.com/ALAGhKXHdw

— End Wokeness (@EndWokeness) April 25, 2024

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Just days after the Biden administration signed a new military aid package worth billions of dollars to Ukraine, Kyiv launched a series of suicide drone attacks on Russian oil refineries. Biden’s top officials have pleaded with Kyiv to stop attacks on Russia’s energy infrastructure because of the fears that turmoil in crude markets would send pump prices in the US higher ahead of the presidential elections in November. 

“Our region is again under attack by Ukrainian UAVs,” Smolensk Governor Vasily Anokhin wrote in a post on Telegram on Wednesday. Kamikaze drones damaged oil facilities in western Russia. 

Another drone attack hit the Lipetsk region further south, which is home to steel production plants and pharmaceutical sites, Governor Igor Artamonov said.

“The Kyiv criminal regime tried to hit infrastructure in Lipetsk industrial zone,” Artamonov said. 

The Moscow Times pointed out:

A source in the Ukrainian defense sector confirmed to AFP on Wednesday that drones in the service of the Security Service of Ukraine (SBU) had carried out the attacks.

The source made no mention of the attack on Lipetsk but claimed two oil depots were destroyed in the Smolensk region.

“Rosneft lost two storage and pumping bases for fuels and lubricants in the towns of Yartsevo and Rozdorovo,” the source said, referring to the Russian state-controlled energy giant.

The Financial Times, citing unnamed US officials, recently said long-range drones have hit at least 20 energy facilities deep within Russia so far this year. Kyiv’s drone attacks on Russia’s energy complex have been frightening for the Biden administration, as Brent prices have risen to the $90/bbl level on higher war risk premiums. Higher energy costs feed into inflation as stagflation concerns mount in the US. Also, gasoline pump prices in the US are inching closer to the politically sensitive $4 level. 

According to AAA data, the average cost of gas at the pump across the US was $3.66 as of Thursday, up from $3.10 in mid-January. 

“The recent uptick in US consumer price inflation, driven by services, housing and fuel, is already of concern to the Biden administration, which is hoping to secure a second term in the November election,” Markus Korhonen, senior associate at geopolitical risk consultancy S-RM, told Newsweek.

In recent weeks, Brent prices jumped to the $90bbl to $92bbl range on a higher war risk premium as Israel and Iran volleyed missiles and drones at each other. Prices sank to as low as the $85bbl handle as the market saw the Middle East conflict was just theatrics. However, prices have increased from $85bbl earlier this week, to $89.50 on Friday morning – perhaps on new fears of tighter Russia supplies. 

The latest Bloomberg data shows Russian seaborne crude exports hit a multi-month high in the four weeks to April 21. Refineries in the country have struggled to be repaired from the series of drone attacks as oil processing sinks to lows last seen in May 2023 when floods forced the Orsk refinery offline. 

So far, Ukraine has only attacked oil-processing facilities deep within Russia, avoiding crude and crude product export ports. 

“Should Ukraine begin also targeting crude oil facilities, this could threaten Russia’s overall production and exports and, more meaningfully, global oil prices would tick up, driving up inflation and cost-of-living pressures in the US and elsewhere,” said Korhonen, adding, “It would also raise the prospects of Russia retaliating, for example, targeting energy infrastructure that the West relies on.”

The ultimate goal of Ukraine’s drone attacks is to reduce Moscow’s oil revenues that finance the war. This means that Russia’s crude export ports will be targeted at some point. And we’re 100% sure the Biden administration is terrified about this ahead of the elections. 

If that happens, “it would not only bring up the price of oil, it would put a lot of pressure on inflation because of the impact on prices,” said O’Donnell.

The question becomes when does Kyiv begin hitting Russia’s crude export terminals. 

With inflation data surprising to the upside recently…

Source: Bloomberg

…the doves’ last chance for sooner than later rate-cuts is today’s Core PCE Deflator – often described as The Fed’s favorite inflation signal. Last month saw an uptick in the headline deflator and following yesterday’s core PCE rise for Q1, all eyes are on the March data released this morning.

However, both the headline and core PCE Deflator data printed hotter than expected (+2.7% vs +2.6% exp vs +2.5% prior and +2.8% vs +2.7% exp vs +2.8% prior respectively)…

Source: Bloomberg

The silver lining is that this hot PCE print is ‘dovish’ relative to the GDP-based data we saw yesterday, with whisper numbers of +0.4 to +0.5% MoM (vs the +0.3% print).

But still – it’s not good for the doves.

As WSJ Fed Whisperer Nick Timiraos notes, the 3-Month annualized core PCE jumped to 4.4%…

The Service sector led the MoM and YoY acceleration in headline PCE…

Source: Bloomberg

And for Core PCE, it was Services prices too that drove the acceleration…

Source: Bloomberg

The so-called SuperCore – Services inflation ex-Shelter – rose once again, and was revised higher…

Source: Bloomberg

Stripping it back even further, Transportation Services and ‘Other Services’ were the biggest gainers in SuperCore…

Source: Bloomberg

Income and Spending both rose again on a MoM basis with spending outpacing income (again). The 0.8% MoM rise in spending was the highest since Jan 2023…

Source: Bloomberg

Spending is accelerating fast relative to incomes (on a YoY basis) – and remember this is all nominal…

Source: Bloomberg

On the income side, government and private wage growth accelerated:

Govt wages rose to 8.5% YoY, from 8.3%, the highest Dec 22

Private wages rose to 5.5% YoY, from 5.4%, highest since Dec 22 as well

Source: Bloomberg

Which meant the personal savings rate plunged to 3.2% from 3.6% – its lowest since Nov 2022…

And the soaring credit card balance explains how people are getting by…

Source: Bloomberg

And all this amid the fourth straight month of government handouts…

Source: Bloomberg

Finally, while the markets are exuberant at the survey-based disinflation, we do note that it’s not all sunshine and unicorns. The vast majority of the reduction in inflation has been ‘cyclical’…

Source: Bloomberg

Acyclical Core PCE inflation remains extremely high, although it has fallen from its highs.

Is The (apolitical) Fed going to be able to cut at all this year like Joe Biden said they would?