-Having briefly slowed its inexorable rise in April - offering reawakened hope for the 'transitory' or 'peak' inflation camp - consumer prices were expected to continue accelerated in May (as energy costs soared). Consumer prices rose by a far larger than expected 1.0% MoM (significantly higher than the +0.3% MoM in April and the +0.7% Exp). That sent the YoY CPI to +8.6% - a new cycle high. Headline CPI pushed to its highest since 1981 and has now risen for 24 straight months. Core CPI offered no respite as it soars 6.0% YoY (worse than the +5.9% YoY exp). While almost all major components increased over the month, the largest contributors were the indexes for shelter, airline fares, used cars and trucks, and new vehicles. The indexes for medical care, household furnishings and operations, recreation, and apparel also increased in May. The picture is getting worse and the inflation is spreading.
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-A downturn, if not a full-on recession, is clear in the transportation world. While the rest of the economy debates whether things are that bad, it’s been clear for months to logistics providers that the situation has worsened — and the velocity of that change is still stunning. The cost to move a container from Asia to a major port in North America or Europe has sunk by 23% since the beginning of this year, according to maritime research firm Drewry. Spot rates have plummeted even faster; marketplace Freightos said rates from China to the West Coast are down 38% month-over-month. FreightWaves forecast this week that ocean shipping volumes will “drop off a cliff” by this summer, based on slumping bookings out of China. Spot van rates in trucking are down 31% since the beginning of this year, with some truck drivers reporting that rising diesel and plummeting rates have already harmed their business. Even our mighty railroads are reporting a 3% year-to-date decline in volumes across the board, with only carloads of coal, chemicals and “stone, sand and gravel” (aka, frac sand) increasing.
-The latest inflation figures are due on Friday and will reveal if consumer prices are signaling a peak or will remain at four-decade highs that have financially devastated American households. For months, households have been battered by soaring fuel, grocery-store food, and power bill costs -- all rising at double-digit annual rates for the first time since 1981, according to Bloomberg. Economists surveyed by Bloomberg forecast consumer prices in May will be around 8.2%, versus 8.3% in April, though some leading estimates suggest a move between 8.3% to 8.4%. The print isn't expected to deviate too much from the 40-year high of 8.5% in March, and elevated inflation levels will continue to wreck lower-tier households. The souring economic backdrop with threats of stagflation is crushing households, and their views on the economy are bleak. The April consumer credit report from the Federal Reserve on Wednesday showed people are maxing out their credit cards as excess savings accumulated during the pandemic has been wiped out thanks to soaring prices of goods.
-Pro-Russian officials have sentenced to death two British men and a Moroccan national captured while fighting in the Ukrainian army in Mariupol, Russian state media has said.
-The number of Russian soldiers killed since President Vladimir Putin ordered his troops into Ukraine could now be as high as 20,000, according to the latest assessment by western officials. Previous estimates, given several weeks ago, were about 15,000. The official did not speculate on the number of Ukrainians. killed in the war.
-Russia may be getting more revenue from its fossil fuel sales now than before its invasion of Ukraine, according to one US official. Increases in global oil prices have offset the impact of import bans, US energy security envoy, Amos Hochstein, told lawmakers during a senate hearing. Russia has been able to sell more cargoes to other buyers, including major energy consumers China and India, by offering it at a discount to oil from other origins, he said.
-Chinese media showed images of the dramatic aftermath of a military jet crash in a busy residential area of the city of Laohekou, in central Hubei province Thursday morning. China’s state-run national broadcaster CCTV confirmed that at least one person was killed, and two others injured. Military sources said it was a PLA Air Force J-7 fighter that went down near the city's airport while on a training mission. The pilot had successfully ejected from the plane prior to the crash, resulting in a huge fireball amid residential buildgings, and only sustained minor injuries. Tragically, the fatality was reported to be a resident on the ground at the time of impact, with the pilot along with the injured in the area rushed to local hospitals.
-Just days after we reported that "Real-Time Indicators Show The Labor Market Just Cratered", suggesting that the last pillar propping up the US economy (with GDP now just 0.9% away from a full-blown technical recession) was about to crack. The BLS reported that May payrolls actually came in stronger than expected, largely thanks to very generous seasonal adjustments and more than one political tap on the shoulder. This prompted many to ask what is going on: are real time indicators flawed and is the black-box model that is the BLS's politicized, subjective, often flawed methodology the correct one? Moments ago we got a strong hint which way "reality" lies, when we got the latest jobless claims report and it confirmed that indeed, the jobs market is cracking, with initial claims jumping from 203K to 229K. The latest troubling confirmation that the best days for the US jobs market are now behind us and that the BLS has a tough uphill climb as it seeks to represent the monthly payrolls data correctly. We are confident they will get it done in time for the Jackson Hole symposium, around the time the US will officially slide into a recession.
-The top Ukrainian official who was fired for spreading misinformation has admitted that she lied about Russians committing mass rape in order to convince western countries to send more weapons to Ukraine. Lyudmila Denisova, the former Ukrainian Parliamentary Commissioner for Human Rights, was removed from her position following a vote of no confidence in the Ukrainian parliament which passed by a margin of 234-to-9. Parliament member Pavlo Frolov specifically accused Denisova of pushing misinformation that “only harmed Ukraine” in relation to “the numerous details of ‘unnatural sexual offenses’ and child sexual abuses in the occupied territories, which were unsupported by evidence.”
-The New York Times reported on Wednesday that despite the billions of dollars in weapons the US is sending Ukraine, Kyiv has shared few details on its operational plans with Washington. Current and former officials told the Times that US intelligence agencies have a far better picture of Russia’s military operations than Ukraine’s. Even in high-level talks with Secretary of Defense Lloyd Austin and Joint Chiefs Chairman Gen. Mark Milley, Ukrainian officials have only shared their strategic goals, not their operational plans. Washington has such little information on Ukraine’s operations that it has tried to learn information from other countries operating in Ukraine, training sessions with Ukrainian forces, and even from Ukrainian President Volodymyr Zelensky’s public comments. The Times report indicated that "information gaps within the U.S. government could make it more difficult for the Biden administration to decide how to target military aid as it sends billions of dollars in weapons to Ukraine." Further, it cited US officials who said "the Ukrainian government gave them few classified briefings or details about their operational plans, and Ukrainian officials acknowledged that they did not tell the Americans everything." While Zelensky and other Ukrainian officials constantly make claims about the state of Russia’s forces, things like Ukrainian casualties have been a closely guarded secret, until very recently. Last week, Zelensky said Ukraine was losing between 60 and 100 troops each day as the fighting against Russia rages in the east. The officials said that Ukraine’s government wants to project an image of strength to its close partners, so they continue providing military aid. The report says the lack of US knowledge is because Washington has focused its intelligence capabilities to be used against adversaries like Russia while helping partners like Ukraine boost their own intelligence services.
-Europe's natural gas prices jumped Thursday after one of the US' largest liquefied natural gas (LNG) export terminals experienced an explosion on Wednesday and has been shut down. A large share of the terminal's LNG has been destined for Europe as the continent weens off Russian supplies. According to Bloomberg, the Freeport LNG export terminal in Texas will be shuttered for at least three weeks, which will impact 20% of all US LNG exports. In the last four months, 75% of all US LNG exports have been sent to Europe. After the reports of the explosion, we noted that US natgas was sold due to export halt fears would build supplies on the domestic grid; inversely, EU natgas would soar because of a decline in export shipments.
-Protest organizing group Shut Down D.C. plans to block access to the Supreme Court in Washington on June 13. In online meeting footage obtained by The Epoch Times, the group announced that it planned to seal off all three vehicle entrances to the court so justices wouldn’t be able to get in and announce a decision that might overturn Roe v. Wade. “Goal is to create a decision dilemma, presenting the court, Congress, and law enforcement (and the political leaders that oversee them) with three unacceptable (to them) options,” a video slide made by the activists reads. The group’s presentation says it would either stop Supreme Court justices from entering the court, “continue to escalate the crisis in democracy” by making police remove the demonstrators by force, or make the government implement its demands.
-Finland’s government is planning to amend border legislation to allow the building of barriers on its eastern frontier with Russia, it said. Finland shares a 1,300-km (810-mile) length border with Russia, mostly marked with signs and plastic lines, Reuters reports. The move to amend border legislation comes as the Finnish government rushes to strengthen border security amid Russia’s invasion of Ukraine and Finland’s bid to join the Nato military alliance. The government’s proposed amendments include allowing the building of barriers such as fences, as well as new roads to facilitate border patrolling on the Finnish side.
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