Note: I am currently fishing Atlantic salmon on the Moisie river on Québec North Shore. The supply problems affecting the world are also present here: not many salmons…but I am very late in season. Still caught 2 yesterday 
and released them to take care of supply.
Russia’s Gazprom tells European buyers gas supply halt beyond its control
Russia’s Gazprom has told customers in Europe it cannot guarantee gas supplies because of “extraordinary” circumstances, according to a letter seen by Reuters, upping the ante in an economic tit-for-tat with the West over Moscow’s invasion of Ukraine.
The Russian state gas monopoly said in a letter dated July 14 that it was retroactively declaring force majeure on supplies from June 14. The news comes as Nord Stream 1, the key pipeline delivering Russian gas to Germany and beyond, is undergoing 10 days of annual maintenance scheduled to conclude on Thursday. (…)
Known as an “act of God” clause, force majeure is standard in business contracts and defines extreme circumstances that release a party from their legal obligations. The declaration does not necessarily mean that Gazprom will stop deliveries, rather that it should not be held responsible if it fails to meet contract terms. (…)
“This sounds like a first hint that the gas supplies via NS1 will possibly not resume after the 10-day maintenance has ended,” said Hans van Cleef, senior energy economist at ABN Amro. (…)
Apple plans to put the brakes on hiring and spending growth next year in some divisions, people familiar said. The decision stems from a move to be more careful during uncertain times.
- After the news broke, US stocks turned sharply lower.
- Goldman is also reining in expenses. The bank will slow hiring and reinstate annual performance reviews, according to its CFO, who cited the “challenging operating environment.”
Bank of America Says Consumers Are in Great Shape
(…) While the biggest U.S. banks posted double-digit drops in profit, their results showed little evidence of a downturn. U.S. consumers, especially, appear to be in good financial shape, spending at a healthy clip and keeping up with their debt payments.
At Bank of America, executives said, customers have upped their spending while maintaining elevated deposit balances. Credit card spending rose 17%. Loan balances also increased. (…)
Bank of America’s U.S. customers are spending more on services and less on goods, Mr. Moynihan said. Customers spent 41% more on travel and entertainment in the second quarter than they did a year ago. They are also paying more for fuel, spending 42% more on gas.
Default rates remain near record lows, and customers are “paying off their debt at a good clip,” Mr. Moynihan said. (…)
Mortgage originations fell to $14.5 billion in the second quarter, down from $20.3 billion a year ago. Rising interest rates have sapped refinancing demand and are starting to weigh on purchases, a challenge for large banks’ mortgage businesses. Last week, Wells Fargo and JPMorgan reported drops of 36% and 45% in mortgage originations, respectively. (…)
Hmmm…
Source: @WSJ Read full article
SURVEY SAYS! MONETARY POLICY IN ACTION.
Fed Chair Jerome Powell said at his news conference Wednesday, after the Fed’s 0.75 percentage point interest rate boost, that the Michigan survey helped push the central bank away from a 0.5-point increase that had been expected only last week.
The June numbers reported Friday were “quite eye-catching and we noticed that,” Powell said. Inflation expectations among Fed policymakers themselves “moved up after being pretty flat for a long time. So we’re watching that, and we’re thinking this is something we need to take seriously.”
Seriously?
This is the chart the Fed is watching and thinks this is something they need to take seriously:
Gasbuddy.com also has a chart the Fed could take seriously, and it’s updated daily:
Credibility? Be serious! At least, don’t brag about it.
U.S. Home Builder Index Unexpectedly Plunges in July to the Lowest Level since May ’20
The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo decreased 17.9% m/m (-31.3% y/y) to 55 in July after drops of 2.9% to 67 in June and 10.4% to 69 in May, The July level was the seventh consecutive monthly drop to the lowest level since May 2020’s 37. A reading of 68 had been expected in the INFORMA Global Markets survey. The July index was 38.9% below the record-high 90 in November 2020 and below 80 in July 2021.
All the three HMI components continued their decreases this month. The index of present sales conditions fell 15.8% (-25.6% y/y) to 64 in July, the sixth m/m fall in seven months to the lowest level since June 2020, after a 2.6% decline to 76 in June. The level was 33.3% below the record-high 96 in November 2020 and below 86 last July.
The index of expected sales over the next six months slid 18.0% (-38.3% y/y) to 50, the seventh straight m/m slide to the lowest level since May 2020, after a 3.2% decline to 61. The level was 43.8% below the peak of 89 reached in November 2020 and below 81 last July.
The index measuring traffic of prospective buyers worsened 22.9% (-43.1% y/y) to 37, the sixth m/m decrease in seven months to the lowest level since May 2020, after a 9.4% drop to 48. The index was 51.9% below the record-high 77 in November 2020 and below 65 last July.
All the regional index readings dropped this month. The index for the West worsened 25.0% (-42.9% y/y) to 48 in July, the fourth successive m/m decrease to the lowest level since May 2020, on top of a 13.5% drop to 64 in June. The index for the South slid 20.0% (-27.7% y/y) to 60, the sixth monthly slide in seven months to the lowest level since May 2020, after a 1.3% decline to 75. The index for the Midwest fell 10.9% (-30.0% y/y) to 49, the third m/m fall in four months to the lowest level since May 2020, following a 7.8% rebound to 55. The index for the Northeast fell 8.1% (-21.9% y/y) to 57 after an 18.4% drop to 62, registering the second consecutive m/m fall to the lowest level since June 2020 following two straight m/m rises. These regional series begin in December 2004.
Global Housing Boom Fades as Rates Climb Rising interest rates are slamming the brakes on a global housing boom, heaping extra pressure on central banks as they try to tame inflation without triggering deep downturns in their economies.
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Foreign Purchases of U.S. Homes Fall to a Low Foreigners bought 98,600 homes in the year ended in March, down 7.9% from prior year, National Association of Realtors says
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Foreign Buyers Return to US Housing Market After Three-Year Drought
Dr. Copper’s Patients Are All Ill Like many economically sensitive assets, copper is sending an extraordinarily bearish signal right now.
Prices of copper, used in everything from buildings to cars, have collapsed in recent weeks. Prices on the London Metal Exchange are trading around $7000 per metric ton, down 26% from the beginning of June and a stunning 32% since the end of March. Even some of the biggest copper bulls have begun to sound a bearish note. Goldman Sachs now forecasts $6,700 a ton in the coming three months—and a possible move below $6,000 in the case of global recession. (…)
China, which consumes about half the world’s supply, is in deep trouble. The U.S. appears likely to head into recession. And Europe faces the prospect of a deep industrial downturn this winter if Russia turns the screws on gas supply. In a scenario like that, copper has nowhere to hide. The seemingly endless rally in the dollar, which makes commodities priced in dollars more expensive abroad, is simply the coup de grace. (…)
According to Australian bank ANZ, a 10% cut in European manufacturing activity, which is highly dependent on fuel supply, could reduce the European Union’s gross domestic product by 0.5% to 1.0% in any one quarter. (…)
If there’s one saving grace, it’s that inventories are relatively low. London Metal Exchange copper stocks stood at just over 130,000 tons on Friday, up 47% from the beginning of the year but less than half of where they were five years ago. Stocks in Shanghai are also sitting at low levels by historical standards. If the U.S. and Europe do better than expected, that could help offset some pressure from China. But it probably isn’t enough for a significant rally until the Middle Kingdom turns the corner. (…)
- China braced for renewed lockdowns as Omicron subvariant spreads
Source: Bloomberg Read full article
Ukraine warns of big cuts to wheat harvest if Russian blockade continues Black Sea export route key to farmers’ ‘financial cycle’ and easing of global food crisis, says agriculture minister
BofA Survey Shows Full Investor Capitulation Amid Dire Pessimism
(…) Global growth and profit expectations sank to an all-time low, while recession expectations were at their highest since the pandemic-fueled slowdown in May 2020, strategists led by Michael Hartnett wrote in the note. Investor allocation to stocks plunged to levels last seen in October 2008 while exposure to cash surged to the highest since 2001, according to the survey. A net 58% of fund managers said they’re taking lower than normal risks, a record that surpassed the survey’s global financial crisis levels.
Bank of America’s survey, which included 259 participants with $722 billion under management in the week through July 15, said high inflation is now seen as the biggest tail risk, followed by a global recession, hawkish central banks and systemic credit events. At the same time, the most investors since the global financial crisis are betting that inflation will be lower in the next year, which means lower interest rates, according to the poll. (…)
Bank of America strategists said their custom bull & bear indicator remains “max bearish,” which could be a contrarian signal for a short-term rally. (…)
FYI, the S&P 500 dropped 43% between September 2008 and its March 2009 low…