Credit Bubble Bulletin
by Doug Noland
Friday, April 30, 2021
My highly edited version follows:
Ye Editor
For the week ending April 30, 2021:
S&P500 little changed (up 11.3% year-to-date)
Dow Industrials slipped 0.5% (up 11.2%)
Utilities fell 1.1% (up 5.8%)
Transports advanced 1.4% (up 21.0%)
S&P 400 Midcaps gained 0.9% (up 19.0%)
Small cap Russell 2000 added 0.4% (up 15.0%)
Nasdaq100 declined 0.7% (up 8.2%)
Semiconductors dropped 1.7% (up 14.4%)
Biotechs rose 1.5% (down 1.9%).
With gold bullion down $8,
the HUI gold stock index slipped 0.6% (down 3.1%).
U.K.'s FTSE rallied 0.5% (up 7.9% y-t-d).
Japan's Nikkei declined 0.7% (up 5.0% y-t-d).
German DAX fell 0.9% (up 10.3%).
Brazil's Bovespa fell 1.4% (down 0.1%)
China's Shanghai declined 0.8% (down 0.8%)
Federal Reserve Credit last week
expanded $8.0bn to a record $7.770 TN.
Over the past 85 weeks,
Fed Credit expanded $4.043 TN, or 108%.
Commodities Watch:
Spot Gold slipped 0.5% to $1,769 (down 6.8%).
Silver dipped 0.3% to $25.9169 (down 1.8%).
WTI crude rallied $1.44 to $63.58 (up 31%).
Gasoline surged 4.0% (up 47%)
Natural Gas jumped 7.4% (up 15%).
Copper rose 2.9% (up 27%).
Wheat jumped 3.2% (up 15%).
Corn surged 6.4% (up 39%).
Bitcoin rallied $7,453, or 14.7%,
this week to $58,021 (up 100%).
Coronavirus Watch:
April 28 – Wall Street Journal (Luciana Magalhaes and Samantha Pearson):
“An aggressive coronavirus variant from Brazil that has been detected in more than 30 nations is now raging across South America, prompting deaths and hospitalizations to soar even in countries that have widely administered vaccines… The surge here offers lessons for the rest of the world. The P.1 variant has spread to countries including Canada, where in the province of British Columbia, officials have recorded 2,062 cases of P.1 as of April 26, up from 974 as of April 9. Turkey and Hungary have struggled with large surges partly fueled by the more infectious U.K. variant.”
April 28 – Bloomberg (Angus Whitley):
“The U.S. told its citizens to get out of India as soon as possible as the country’s Covid-19 crisis worsens at an astonishing pace. In a Level 4 travel advisory --- the highest of its kind issued by the State Department -- U.S. citizens were told ‘not to travel to India or to leave as soon as it is safe to do so.’ There are 14 direct daily flights between India and the U.S. and other services that connect through Europe, the department said.”
Market Mania Watch:
April 25 – Wall Street Journal (Akane Otani and Michael Wursthorn):
“ ... Rarely have so many assets been up this much at once. The price of lumber has shot up to all-time highs. Residential home sales in the U.S. are at levels last seen in 2006, before the housing bubble collapsed. ... Bitcoin hurtled above $60,000 for the first time last month before pulling back, while Dogecoin briefly jumped to a record, driven by fans posting hashtags like #DogeDay on Twitter. In the venture-capital world, investors are offering startups five times or more the amount of money they are requesting, and the average valuation for all startups has hit a new high.”
April 28 – Financial Times (Siddharth Venkataramakrishnan): “
This year, 875 initial public offerings each raising at least $1m have been clinched globally, according to… Dealogic… That figure far outstrips the previous record set in the final months of the dotcom boom in 2000, when 592 companies raised $1m or more in floats over the same time period. The deluge of listings has lifted IPO proceeds to a record-setting $230bn this year, well above the previous peak of $80bn set in 2000.”
April 26 – CNBC (Lora Kolodny):
“Tesla reported first-quarter results…, including a record quarterly net profit of $438 million on a GAAP basis. As usual, those profits were buoyed by sales of environmental regulatory credits. But in a new wrinkle this quarter, the company’s sales of bitcoin during the quarter also contributed $101 million toward the bottom line.”
Inflation Watch:
April 27 – Bloomberg (Payne Lubbers):
“ ... In early-season earnings calls, executives from burrito chain Chipotle Mexican Grill Inc. to appliance giant Whirlpool Corp. and diaper maker Procter & Gamble Co. have outlined price hikes, largely in response to rising materials costs. … Shortages, bottlenecks and a year-long bull market in commodities have been pushing inflation rates higher across much of the world. In the U.S., which pumped more pandemic stimulus into its economy than most countries and has managed a faster vaccine rollout, those supply issues may be amplified by a boom in demand.”
April 23 – Bloomberg (James Attwood and Yvonne Yue Li):
“Industrial metals from copper to aluminum to iron ore have rallied to the highest level in years. ... Copper -- critical for everything from electrical wiring to motors and thus a bellwether for the global economy -- broke out of its recent range to trade near the highest since the last supercycle as industrial operations ramp up worldwide. Iron ore, aluminum and steel are meanwhile gaining on speculation that production cuts will shrink supplies just as demand is taking off. And a weaker dollar is making commodities traded in the currency cheaper to buy.”
April 26 – Bloomberg (Kim Chipman and Megan Durisin):
“ ... Wheat, corn and soybeans, the backbone of much of the world’s diet, are all surging to highs not seen since 2013 after gains last week had some analysts warning that a speculative bubble was forming. Bad crop weather in key-producing countries is a major culprit. Dryness in the U.S., Canada and France is hurting wheat plants, as well as corn in Brazil. Rain in Argentina is derailing the soy harvest. ... Meanwhile, China is gobbling up the world’s grain supplies and is set to import the most corn ever as it expands its massive hog herd. ... "
April 25 – Bloomberg (Megan Durisin and Deirdre Hipwell):
“ ... This week, the Bloomberg Agriculture Spot Index — which tracks key farm products — surged the most in almost nine years, driven by a rally in crop futures. With global food prices already at the highest since mid-2014, this latest jump is being closely watched because staple crops are a ubiquitous influence on grocery shelves — from bread and pizza dough to meat and even soda. Soaring raw material prices have broad repercussions for households and businesses, and threaten a world economy trying to recover from the damage of the coronavirus pandemic. ... ”
April 27 – Bloomberg:
“Steel prices are spiking from Asia to North America, and iron ore’s marching higher, as bets on a global economic recovery fuel frenzied demand. The world outside China is finally catching up with the Asian steel giant’s already strong markets as a global rebound drives a powerful wave of buying that can’t be matched by production. Sectors such manufacturing and construction are ramping up and governments have pledged to splurge on infrastructure as they map their post-pandemic path back to growth. Mills’ order books are filling up as buyers look to lock in steel after a year of output curbs and idling of plants.”
April 24 – Wall Street Journal (Will Parker):
“Americans are paying more to rent homes again, ending a stretch during the pandemic when they enjoyed flat or falling rental prices and widespread landlord concessions. ... A record-low inventory of homes for sale also leaves more people renting. Median asking rent rose 1.1% on an annual basis in March to $1,463 a month across the country’s 50 largest markets, according to… Realtor.com.”
April 25 – Wall Street Journal (Leslie Scism and Arian Campo-Flores):
“Florida’s property-insurance market is in trouble, as mounting carrier losses and rising premiums threaten the state’s booming real-estate market, according to insurance executives and industry analysts. Longtime homeowners are getting socked with double-digit rate increases or notices that their policies won’t be renewed. Out-of-state home buyers who have flocked to Florida during the pandemic are experiencing sticker shock. Insurers that are swimming in red ink are cutting back coverage in certain geographic areas to shore up their finances. Various factors are at play, insurance executives and analysts say. Two hurricanes that slammed the state—Irma in 2017 and Michael in 2018—generated claims with an estimated cost of about $30 billion.”
April 27 – Bloomberg (Marcy Nicholson):
“Since June 2020, lumber futures have more than tripled to a record $1,326 per 1,000 board feet.”
April 26 – Yahoo Finance (Brian Sozzi):
“ ... the chlorine shortage building steam across the country is hardly improving. The problem — in terms of chlorine availability and prices —stems from Hurricane Laura causing a fire last August at one of the country's largest chlorine tablet makers BioLab… McShane notes that chlorine prices surged 37% year over year in March due to the supply shortage. Prices are seen spiking 58% year over year from June to August…”
Biden Administration Watch:
April 29 – Wall Street Journal (Jacob M. Schlesinger):
“ ... With his $1.8 trillion American Families Plan unveiled Wednesday—following his $2.3 trillion American Jobs Plan and his $1.9 trillion American Rescue Plan—President Biden has proposed $6 trillion in new federal spending for the next decade. That is far more than any recent president at a comparable point in their terms.”
April 28 – Associated Press (Josh Boak):
“President Joe Biden signed an executive order… to increase the minimum wage to $15 an hour for federal contractors, providing a pay bump to hundreds of thousands of workers. Biden administration officials said that the higher wages would lead to greater worker productivity, offsetting any additional costs to taxpayers.”
U.S. Bubble Watch:
April 28 – Reuters (Lucia Mutikani):
“ ... The US goods trade deficit surged 4.0% to $90.6 billion last month, the highest in the history of the series. Exports of goods accelerated 8.7% to $142.0 billion…. The jump in exports was offset by a 6.8% advance in imports to $232.6 billion. Imports rose broadly. There were large gains in imports of motor vehicles, industrial supplies, consumer goods and food. Capital goods imports also rose solidly.”
April 27 – CNBC (Diana Olick):
“Home ... prices in February rose 12% year over year, up from 11.2% in January, according to the S&P CoreLogic Case-Shiller home price index. The 10-city composite rose 11.7% annually, up from 10.9% in January. The 20-city composite gained 11.9%, up from 11.1% in the previous month. All the gains were in the double digits, except Chicago and Las Vegas. ‘The National Composite’s 12% gain is the highest recorded since February 2006, exactly 15 years ago ... ”
April 29 – Bloomberg (Reade Pickert):
“U.S. economic growth accelerated in the first quarter as a rush of consumer spending helped bring total output to the cusp of its pre-pandemic level, foreshadowing further impressive gains in coming months. Gross domestic product expanded at a 6.4% annualized rate following a softer 4.3% pace in the fourth quarter… Personal consumption, the biggest part of the economy, surged an annualized 10.7%, the second-fastest since the 1960s.”
April 30 – Bloomberg (Olivia Rockeman):
“U.S. personal incomes soared in March by the most in monthly records back to 1946, powered by a third round of pandemic-relief checks that also sparked a sharp gain in spending. The 21.1% surge in incomes followed a 7% decline in February… Purchases of goods and services, meanwhile, increased 4.2% last month, the most since June.”
April 29 – Bloomberg (Keith Naughton and Gabrielle Coppola):
“Ford Motor Co. reduced its full-year forecast due to a debilitating computer-chip shortage that has crimped vehicle production, a crisis the automaker now sees extending into next year. A global shortfall of critically needed semiconductors has forced the entire automotive industry to cut output, leaving thin inventories on dealer lots just as consumers emerge from Covid-19 lockdowns. Ford expects a $2.5 billion hit to earnings due to scarce chip supplies, which it previously characterized as a worst case scenario.”
April 26 – Associated Press (Mike Schneider and Nicholas Riccardi):
“U.S. population growth has slowed to the lowest rate since the Great Depression …, as Americans continued their march to the South and West and one-time engines of growth, New York and California, lost political influence. Altogether, the U.S. population rose to 331,449,281 last year…, a 7.4% increase over the previous decade that was the second-slowest ever. Experts say that paltry pace reflects the combination of an aging population, slowing immigration and the scars of the Great Recession more than a decade ago, which led many young adults to delay marriage and families.”
April 28 – Bloomberg (Jeffrey Bair):
“California gasoline prices rose to $4 a gallon for the first time in a year and a half as more motorists hit the road amid easing pandemic restrictions in the most-populous U.S. state. The price in the most-expensive U.S. fuel market is up about 10 cents over the last month… Gasoline consumption across the country is on track for its third straight monthly increase, which which would be the longest streak since last summer, Energy Information Administration figures showed.”
Global Bubble Watch:
April 29 – Reuters (Leigh Thomas):
“ ... To finance a multi-trillion-dollar infrastructure investment plan, Biden wants to lift the U.S. corporate tax rate from 21% to 28% and scale back loopholes that companies can use to cut their tax bills. Though there is no assurance that Congress will approve a rate that high, 28% would be well above the current average of 21% for member countries of the Paris-based OECD group of industrialised nations. However, it would be well below the 46% U.S. companies faced in the 1980s before the free-market Reagan and Thatcher revolutions fired up competition between governments worldwide to cut their corporate tax rates lower.”
April 29 – Bloomberg (Peter Vercoe):
“The global chip shortage is going from bad to worse with automakers on three continents joining tech giants Apple Inc. and Samsung Electronics Co. in flagging production cuts and lost revenue from the crisis. In a dizzying 12-hour stretch, Honda Motor Co. said it will halt production at three plants in Japan; BMW AG cut shifts at factories in Germany and England; and Ford Motor Co. reduced its full-year earnings forecast due to the scarcity of chips it sees extending into next year. Caterpillar Inc. later flagged it may be unable to meet demand for machinery used by the construction and mining industries. ... ”
April 27 – Bloomberg (Fabiana Batista and Jonathan Gilbert):
“The South American drought that’s helping push corn and soybean prices to multiyear highs isn’t just threatening crops, but also the ability to haul them on waterways that are drying up. On the increasingly shallow rivers that flow through top producers Brazil, Argentina and Paraguay, barges are carrying less than their usual load. The situation is so desperate in Paraguay that the country is asking neighboring Brazil to release water from the giant Itaipu hydroelectric dam, after vessels have run aground and logjams are forming…”
Europe Watch:
April 29 – Bloomberg (William Horobin and Alessandra Migliaccio):
“The euro-area economy slid into a double-dip recession at the start of the year as strict coronavirus lockdowns across the region kept many businesses shuttered and consumers wary to spend… Output in the 19-nation euro area was down 0.6% in the first quarter and declined at nearly three times that pace in Germany.”
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.