-Ukrainian fighters are struggling to use some of the weaponry provided by Washington to battle Russian forces, including Javelin anti-tank missiles, because the Pentagon has failed to provide training materials, spare parts and other logistical assistance, The Washington Post reported on Tuesday. The breakdown stems from an absence of “wartime customer service,” the types of support that US troops rely on to keep their weapons operable, the newspaper said, citing interviews with Ukrainian commanders and Western volunteer fighters. The Post gave the example of Javelin missile launchers that couldn’t be used because of failed electrical components and poor translation of user instructions.
-The US Permanent Representative to NATO, Julianne Smith, said on Tuesday that Washington would “want to support” the idea of a new security alliance, which could reportedly include Ukraine, the UK, Poland, the Baltic States, and possibly Turkey. Last month, Italy’s Corriere della Sera newspaper reported that British Prime Minister Boris Johnson had floated the idea of a so-called “European Commonwealth” to Ukrainian President Volodymyr Zelensky during his visit to Kiev in early April. According to the paper’s sources, Johnson sees the bloc as “a new system of political, economic and military alliances – alternative to the European Union.”
-The Fed can’t stop inflation. Here is why:
1) The U.S. has $31 trillion in debt.
2) The U.S. is already spending $305 billion in interest payments every year with rates at ZERO.
3) Every 1% increase in rates by the Fed means U.S. debt payments rising another $300 billion.
4) The Fed wants to raise rates to 3%... which would mean the U.S. spending nearly $1 trillion in interest payments… without reducing its debt by a CENT!
5) This would mean the U.S. spending 25% of its current budget on interest payments alone… while its debt pile continues to rise by trillions per year.
Put simply, the Fed cannot raise rates anywhere near the levels it hopes without triggering a debt crisis that would make 2008 look like a joke. So, inflation is going to rage for years to come. Sure it might come down a bit in the data. But it’s not disappearing anytime soon. And the market's know it. We may be entering a 10 year bear market where commodities and other inflation hedges are likely where the BIG money will be made for months if not years to come.
-Instagram will prevent teen users from spending too long scrolling through posts with a particular theme, the social media behemoth announced on Tuesday, adding that the feature was being rolled out across the US, the UK, Canada, Ireland, Australia, and New Zealand. Teen users who are devoting what the platform judges to be “too much” time on Instagram’s Explore page looking at posts with a certain theme will be hit with a notification suggesting they look at other types of material instead. The feature “is designed to encourage teens to discover something new,” according to a statement posted by parent company Meta. Users will be prompted to “choose what to explore next” and presented with an array of different images, each leading to a topic unrelated to whatever they were previously looking at.
-The economic pain for many countries being caused by still-high crude oil (and gas) prices may be exacerbated by another extensive series of blockades of key oil facilities in Libya. The relentless oil price is causing economic havoc around the world, and Libya represents a major supply risk that could send prices even higher. The recent failed attempt by Bashagha to take power in Tripoli has heightened tensions in the country and could lead to significant supply outages.
Until there is genuine progress on the issue of fair distribution of oil revenues within the country, this risk of major supply outages will continue to plague markets.
-The US Department of Defense is splurging too much money on promoting Pride Month, while neglecting “military preparedness,” a faction of Republican congressmen has charged, in a letter to Secretary of Defense Lloyd Austin. The representatives say they want full accounting of the DOD’s use of taxpayer dollars spent on furthering diversity and LGBTQ values.
-Pope Francis has doubled down on prior controversial statements suggesting the Russia-Ukraine conflict is largely NATO's fault, asserting also that "war cannot be reduced to distinction between good guys and bad guys" - as the Vatican's own headline to the interview reads. In statements published Tuesday by the Jesuit magazine La Civiltà Cattolica, the Roman Catholic leaders said that the Russian invasion was "perhaps somehow provoked" while again saying there were signs that NATO had been "barking at the gates of Russia" in the run-up.
-On Monday, Deputy Secretary of Defense Kathleen Hicks said Pentagon leaders believe the state of Ukraine will survive Russia’s invasion and that the US is preparing to arm the country for years to come. "I think what we can assure ourselves today is that there will be a country called Ukraine. It will be a sovereign country and that country will have a military that will need to defend it," Hicks said at the Defense One Tech Summit. "And so as we look ahead, we’re thinking through what are the kinds of capabilities that the Ukrainians need to protect themselves over the long term," she added. So far, the US has allocated about $54 billion to spend on Ukraine’s war effort, the majority of which will go towards military assistance. The funds are meant to last through the 2022 fiscal year, which ends on September 30 for the federal government.
But Hicks said the Pentagon is looking to support Ukraine in the long-term, over the next five, 10, and 20 years into the future.
-Another food processing plant went up in flames. According to local news Stevens Point Journal, a fire ripped through a pizza-making plant in Wisconsin on Monday. More than 70 firefighters from multiple fire departments battled a massive fire at Festive Foods in eastern Portage County that began around 0900 local time. The American Red Cross arrived on the scene shortly after to provide food and water to firefighters. They snapped two pictures of the blaze, showing flames erupting from the facility's roof and a column of thick dark smoke pouring into the air. Firefighters were able to get the blaze under control in the early evening, and damage to the food processing plant has yet to be fully assessed. However, Festive Foods' Facebook page indicates the plant is "temporarily closed." Festive Foods manufactures frozen pizzas for supermarkets in a 120,000 sq. feet facility and considers itself a "leading co-packer of USDA-certified frozen-topped pizza, sandwiches, dough products, and stuffed appetizers." The company sells its products to supermarkets nationwide.
-Ukrainian President Volodymyr Zelenskiy called for more long-range weapons to support Ukraine’s military, which he said had enough ammunition and weapons. Western countries have promised Ukraine Nato-standard weapons but deploying them is taking time. Germany’s defence minister said that the training of Ukrainian troops on German howitzers would soon be completed, but didn’t give a date for when these would be dispatched.
-Russian President Vladimir Putin likely still wants to capture much if not all of Ukraine but has had to narrow his tactical objectives in war, the US under-secretary of defense has said. Colin Kahl said: I still think he has designs on a significant portion of Ukraine, if not the whole country. That said, I do not think he can achieve those objectives. They may make tactical gains here and there. The Ukrainians are holding up. I do not think the Russians have the capacity to achieve those grandiose objectives.
-Having initially suggested the Freeport LNG Terminal would be closed for three weeks after an 'explosion' shuttered the major exporet facility last week, the company has just issued an update saying that it now expects a partial restart in 90 days. This sent US NatGas prices reeling, down almost 20%.
-Until recently, many strategists had assumed central banks would prefer to live with rising inflation rather than put economic growth at risk. Events in the last few days are causing them to rethink that. “More hawkish central banks last week reminded us that inflation is their prime concern, while activity/growth and markets are lesser considerations,” say Barclays strategists including Matthew Joyce. It’s such concerns that are behind the latest selloff in equities, both in Europe and beyond. Joyce and his colleagues say plunging consumer confidence may indicate a direct impact on growth from the inflation situation, and recommend keeping an overweight on defensive stocks, as well as on value shares.
-Following CPI's unexpected crushing of the 'peak inflation' narrative, analysts expected PPI to slow modestly from 11.0% YoY to 10.9% YoY in May. US Producer Prices actually printed a slight miss at +10.8% YoY and was up 0.8% MoM - the 25th straight month of increasing prices. Nearly two thirds of the May increase was due to an advance in goods prices, especially energy.
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