Falling estimates continue to drag this building products stock lower. AZEK (AZEK) is a Zacks Rank #5 (Strong Sell) that engages in designing, manufacturing, and selling building products for residential, commercial, and industrial markets in the United States. AZEK’s main focus is outdoor living products, like decking, railing and trim.As the housing market heated up after COVID, so did the stock. However, with the equity markets moving lower and mortgage rates moving higher, it means less cash for those outdoor projects at home.The stock is well off its highs, but with earnings estimates still heading lower, investors might want to stay away until we see a turn around in earnings.About the Company AZEK is headquartered in Chicago, Illinois. The company was incorporated in 2013 and employs over 2,000 people.In addition to decks for residential houses, AZEK has a commercial segment. This part of the business manufactures engineered polymer materials that is used in various industries, which includes outdoor, graphic displays and signage, educational, and recreational markets, as well as the food processing and chemical industries.AZEK is valued at $2.7 billion and has a Forward PE of 16. The stock holds a Zacks Style Score of “D in Value, “D” in Growth and “F” in Momentum. The stock pays out no dividend.Q1 Earnings The company reported EPS back in early May, seeing a 6% beat on EPS. Revenues came in above expectations at $396.3M v the $369M expected. The company also raised their FY22 revenue guidance and EBITDA.This was eight straight beat and the company has never missed since becoming public. While having a history of beating expectations are great, the market is clearly worried this won’t continue. Analysts have been lowering estimates for the company all year. EstimatesAfter earnings, analysts were positive on demand, but negative on margins and cost headwinds. Inflationary pressures will eat into the bottom line and for that reason, earnings estimates are going lower.For the current quarter, estimates have fallen from $0.32 to 0.27, or 10% over the last 60 days. For the current year, the numbers have dropped 8%, from $1.18 to $1.08.Technical TakeThe stock debuted right after the COVID bottoms and almost doubled from the IPO price. However, since the beginning of 2022, the stock has dropped like a rock, down over 60%.With such little chart history, its hard to tell where the bottom is. Until there is relief in the earnings estimates, the stock will likely continue to bleed lower.If there is a positive catalyst, investors should watch the 50-day moving average. If price got over the area, which is currently at $20, there could finally be a move higher in the name.If the stock did happen to bounce, it would likely be a selling opportunity unless inflationary pressure abates.In SummaryWith mortgage rates going higher and equity markets going lower, there is less money for AZEK’s services. While demand is still healthy, this trend might not continue if the economy worsens. Additionally, cost pressures will eat into margins, putting a squeeze on the bottom line.These are two factors that are giving the bears fuel to sell the stock lower.For now, a better option in the sector might be Comfort Systems (FIX). The stock is a Zacks Rank #2 (Buy) and has held up relatively well over the last six months.      Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The AZEK Company Inc. (AZEK): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Stocks, Cryptos Tumble To Close Out Catastrophic First-Half It was supposed to be a 7% ramp into month-end on billions in pension fund residual buying. Instead, it ended up being more or less the opposite, with crypto-led liquidations dragging futures and global markets lower, and extending Wednesday losses after central bankers issued warnings on inflation and fueled concern that aggressive policy will end with a hard-landing recession, which increasingly more now see as being 2022 business, an outcome that now appears assured especially after yesterday's disastrous guidance cut from RH, the second in three weeks! Recession fears and inflation woes may be prolonged by today's PCE deflator report. The consumer price gauge favored by the Fed may have picked up to 6.4% last month from 6.3%. Personal income growth probably edged up but Bloomberg Economics highlights an anticipated decline in real personal spending as a major worry. Meanwhile, China’s economy showed further signs of improvement in June with a strong pickup in services and construction, even if the latest Chinese PMI print came slightly below expectations. Also overnight, Russia said it withdrew troops from Ukraine’s Snake Island in the Black Sea after Ukraine said its forces drove Russian troops from the area. In any case, with zero demand from pensions so far (even though the continued selling in stocks and buying in bonds will only make the imabalnce bigger), overnight Nasdaq 100 contracts dropped 1.8% while S&P 500 futures declined 1.3%, and cryptos crumbled, with bitcoin dragged back below $19000 and Ether on the verge of sliding below $1000. The tech-heavy gauge managed to end Wednesday’s trading slightly higher, while the S&P 500 fell for a third straight day. In Europe, the Stoxx Europe 600 Index slid 1.9%. Treasuries gained, the dollar was steady and gold declined and crude oil futures edged lower again. Which brings us to the last trading day of a quarter for the history books: the S&P 500 is set for its biggest 1H decline since 1970 and the Nasdaq 100 since 2002, the height of the dot.com bust. The Stoxx 600 is set for the worst 1H since 2008, the height of the GFC.  Traders have ramped up bets that the global economy will buckle under central bank tightening campaigns -- and that policy makers will eventually backpedal. The bond market shifted to price in a half-point rate cut in the Federal Reserve’s benchmark rate at some point in 2023. On Wednesday, during the annual ECB annual forum, Fed Chair Jerome Powell and his counterparts in Europe and the UK warned inflation is going to be longer lasting. A view that central banks need to act fast on rates because they misjudged inflation has roiled markets this year, with global stocks about to close out their worst quarter since the three months ended March 2020. “Markets are worried about growth as central bankers continue to emphasize that bringing down inflation is their overriding objective, and that it may take time to bring inflation down,” said Esty Dwek, chief investment officer at Flowbank SA. “We still haven’t seen total capitulation in markets, so further downside is possible.” Meanwhile, the cost of insuring European junk bonds against default crossed 600 basis points for the first time in two years on Thursday. And speaking of Europe, stocks are also down over 2% in early trading, with all sectors in the red. DAX and CAC underperform at the margin with autos, consumer discretionary and banking sectors the weakest within the Stoxx 600.  Here are some of the biggest European movers today: Uniper shares slump as much as 23% after the German utility withdrew its outlook and said it was discussing a possible bailout from the German government following Russia’s move to curb natural gas deliveries. SAP sinks as much as 6.5% after Exane BNP Paribas downgraded stock to neutral from outperform, saying it sees risks on demand side in the near term as software spending decisions come under increased scrutiny. Sanofi shares decline as much as 4.5% after the French drugmaker said the FDA placed late-stage clinical trials of tolebrutinib on partial hold in US because of concerns about liver injuries. European semiconductor stocks fell, following peers in the US and Asia lower amid growing concerns that the industry might face a downturn soon as chip stockpiles build. ASML drops as much as 3.4%, Infineon -4.1%, STMicro -3.1% Norsk Hydro shares slide as much as 6% amid metals decline and as DNB cuts the stock to sell from hold, citing concerns about rising aluminum supply. Stainless steel stocks in Europe fall, with Morgan Stanley saying the settlement on the latest ferrochrome benchmark missed its expectations. Outokumpu shares down as much as 6.6%, Aperam -7.2%, Acerinox -4% Saab shares jump as much as 8.4%, after getting an order worth SEK7.3b from the Swedish Defence Materiel Administration for GlobalEye Airborne Early Warning and Control aircraft. Orsted shares rise as much as 2.5%, before paring some of the gains. HSBC raises to buy from hold, saying any further downside for the wind farm operator looks limited. Bunzl shares rise as much as 2.6% after the specialist distribution company said it now expects very good revenue growth in 2022. Grifols shares rise as much as 7.8% after slumping on Wednesday, as the company says that the board isn’t analyzing any capital increase “for the time being.” Earlier in the session, Asian stocks fell for a second day as tech-heavy indexes in Taiwan and South Korea continued to get pummeled amid concerns over the potential for aggressive monetary tightening in the US to rein in inflation.  The MSCI Asia Pacific Index declined as much as 1.2%, dragged down by technology shares including TSMC, Alibaba and Tencent. Taiwan slid more than 2%, while gauges in Japan, South Korea, Australia dropped more than 1%.  Stocks in mainland China rose more than 1% after the economy showed further signs of improvement in June with a strong pickup in services and construction as Covid outbreaks and restrictions were gradually eased. Traders are also watching Chinese President Xi Jinping’s trip to Hong Kong, his first time outside of the mainland since 2020.  Asian stocks are struggling to recover from a May low as the threat of higher US rates outweighs China’s emergence from strict Covid lockdowns and its pledge of stimulus measures. While mainland Chinese stocks led gains globally this month, the rest of the markets in the region -- especially those heavy with technology stocks and exporters -- saw hefty outflows of foreign funds.  “Investors continue to assess recession and also inflation risks,” Marcella Chow, JPMorgan Asset Management’s global market strategist, said in an interview with Bloomberg TV. “This tightening path has actually increased the chance of a slower economic growth going forward and probably has brought forward the recession risks.” Asian stocks are set to post a more than 12% loss this quarter, the worst since the one ended March 2020 during the pandemic-induced global market rout. Japanese stocks declined after the release of China’s data on manufacturing and non-manufacturing PMIs that showed slower than expected improvements.  The Topix Index fell 1.2% to 1,870.82 as of market close Tokyo time, while the Nikkei declined 1.5% to 26,393.04. Sony Group contributed the most to the Topix Index decline, falling 3.4%. Out of 2,170 shares in the index, 531 rose and 1,574 fell, while 65 were unchanged. “Although China is recovering from a lockdown, business sentiment in the manufacturing industry is deteriorating around the world,” said Tomo Kinoshita, global market strategist at Invesco Asset Management China’s Economy Shows Signs of Improvement as Covid Eases. Indian stock indexes posted their biggest quarterly loss since March 2020 as the global equity market stays rattled by high inflation and a weakening outlook for economic growth.  The S&P BSE Sensex ended little changed at 53,018.94 in Mumbai on Thursday, while the NSE Nifty 50 Index dropped 0.1%. The gauges shed more than 9% each in the June quarter, their biggest drop since the outbreak of pandemic shook the global markets in March 2020. The main indexes have fallen for all but one month this year as surging cost pressures forced India’s central bank to raise rates twice and tighten liquidity conditions. The selloff is also partly driven by record foreign outflows of more than $28b this year.  Despite the turmoil in global markets, Indian stocks have underperformed most Asian peers, partly helped by inflows from local institutions, which made net purchases of more than $30b of local stocks. “Investors worry that the latest show of central bank determination to tame inflation will slow economies rapidly,” HDFC Securities analyst Deepak Jasani wrote in a note.  Fourteen of the 19 sector sub-gauges compiled by BSE Ltd. fell Thursday, with metal stocks leading the plunge. The expiry of monthly derivative contracts also weighed on markets. For the June quarter, metal stocks were the worst performers, dropping 31% while information technology gauge fell 22%. Automakers led the three advancing sectors with 11.3% gain. Australian stocks also tumbled, with the S&P/ASX 200 index falling 2% to close at 6,568.10, weighed down by losses in mining, utilities and energy stocks.  In New Zealand, the S&P/NZX 50 index fell 0.8% to 10,868.70 In rates, treasuries advanced, led by the belly of the curve. German bonds surged, led by the short-end and outperforming Treasuries. US yields richer by as much as 5.4bp across front-end and belly of the curve which outperforms, steepening 2s10s, 5s30s by 2bp and 2.8bp; wider bull-steepening move in progress for German curve with yields richer by up to 13.5bp across front-end with 2s10s wider by 3.5bp on the day. US 10-year yields around 3.055%, richer by 3.5bp. Money markets aggressively trimmed ECB tightening bets on relief that French June inflation didn’t come in above the median estimate. Bonds also benefitted from haven buying as stocks slide. Month-end extension flows may continue to support long-end of the Treasuries curve. bunds outperform by 7bp in the sector. IG issuance slate empty so far; Celanese Corp. pushed back plans to issue in euros and dollars, most likely to next week, after deals struggled earlier this week. Focal points of US session include PCE deflator and MNI Chicago PMI.  In FX, the Bloomberg Dollar Spot Index was steady as the greenback traded mixed against its Group-of-10 peers. The yen advanced and Antipodean currencies were steady against the greenback. French inflation quickened to the fastest since the euro was introduced. Steeper increases in energy and food costs drove consumer-price growth to 6.5% in June from 5.8% in May . Sweden’s krona swung to a loss. It briefly advanced earlier after the Riksbank raised its policy rate by 50bps, as expected, signaled faster rate hikes and a quicker trimming of the balance sheet. The pound rose, snapping three days of losses against the dollar. UK household incomes are on their longest downward trend on record, as the nation’s cost of living crisis saps the spending power of British households. Separate figures showed that the current-account deficit widened sharply to £51.7 billion ($63 billion) in the first quarter. The yen rose and the Japan’s bonds inched up. The BOJ kept the amount and frequencies of planned bond purchases unchanged in the July-September period. The Australian dollar reversed a loss after data showed China’s official manufacturing purchasing managers index rose above 50 for the first time since February in a sign of improvement in the world’s second largest economy. Bitcoin is on track for its worst quarter in more than a decade, as more hawkish central banks and a string of high-profile crypto blowups hammer sentiment. The 58% drawdown in the biggest cryptocurrency is the largest since the third quarter of 2011, when Bitcoin was still in its infancy, data compiled by Bloomberg show. In commodities, WTI trades a narrow range, holding below $110. Brent trades either side of $116. Most base metals trade in the red; LME zinc falls 3.1%, underperforming peers. Spot gold falls roughly $3 to trade near $1,814/oz. Bitcoin slumps over 6% before finding support near $19,000. Looking to the day ahead now, data releases include German retail sales for May and unemployment for June, French CPI for June, the Euro Area unemployment rate for May, Canadian GDP for April, whilst the US has personal income and personal spending for May, the weekly initial jobless claims, and the MNI Chicago PMI for June. Market Snapshot S&P 500 futures down 1.2% to 3,775.75 STOXX Europe 600 down 1.8% to 406.18 MXAP down 1.0% to 158.01 MXAPJ down 1.1% to 524.78 Nikkei down 1.5% to 26,393.04 Topix down 1.2% to 1,870.82 Hang Seng Index down 0.6% to 21,859.79 Shanghai Composite up 1.1% to 3,398.62 Sensex up 0.2% to 53,136.59 Australia S&P/ASX 200 down 2.0% to 6,568.06 Kospi down 1.9% to 2,332.64 Gold spot down 0.2% to $1,814.91 US Dollar Index little changed at 105.04 German 10Y yield little changed at 1.42% Euro little changed at $1.0443 Brent Futures down 0.4% to $115.85/bbl Top Overnight News from Bloomberg The surge in the dollar has set Asian currencies on course for their worst quarter since the 1997 financial crisis and created a dilemma for central bankers French Finance Minister Bruno Le Maire said the EU can deliver the global minimum corporate tax with or without the support of Hungary, circumventing Budapest’s veto earlier this month just as the bloc was on the brink of a agreement German unemployment unexpectedly rose, snapping 15 straight months of decline as refugees from the war in Ukraine were included in those searching for work The SNB bought foreign exchange worth 5.7 billion francs ($5.96 billion) in the first quarter of 2022 as the franc sharply appreciated against the euro and briefly touched parity in March The ECB plans to ask the region’s lenders to factor in the economic hit of a potential cut off of Russian gas when considering payouts to shareholders European stocks were poised for their biggest drop in any half-year period since 2008, as investors focused on the prospects for economic slowdown and stubbornly high inflation in the region New Zealand will enter a recession next year that could be deeper than expected, Bank of New Zealand economists said after a survey showed business sentiment continues to slump A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were varied at month-end amid a slew of data releases including mixed Chinese PMIs. ASX 200 was dragged lower by weakness in energy, miners and the top-weighted financials sector. Nikkei 225 declined after disappointing Industrial Production data and with Tokyo raising its virus infection level. Hang Seng and Shanghai Comp. were somewhat mixed with Hong Kong indecisive and the mainland underpinned after the latest Chinese PMI data in which Manufacturing PMI printed below estimates but Non-Manufacturing PMI firmly surpassed forecasts and along with Composite PMI, all returned to expansion territory. Top Asian News NATO Secretary General Stoltenberg said China's growing assertiveness has consequences for the security of allies, while he added China is not our adversary, but we must be clear-eyed about the serious challenges it presents. US blacklisted 5 Chinese firms for allegedly helping Russia in which Connec Electronic, King Pai Technology, Sinno Electronics, Winnine Electronic and World Jetta Logistics were added to the entity list which restricts access to US technology, according to WSJ. Japan's government cut its assessment of industrial production and noted that production is weakening, while it stated that Japan's motor vehicle production declined 8% M/M and that industrial production likely saw the largest impact of Shanghai's COVID-19 lockdown in May, according to Reuters. Tokyo metropolitan government will reportedly increase COVID infections level to the second-highest, according to FNN. It’s been a downbeat session for global equities thus far as sentiment deteriorates further. European bourses are lower across the board, with losses extending during early European hours. European sectors are all in the red but portray a clear defensive bias. Stateside, US equity futures have succumbed to the glum mood, with the NQ narrowly underperforming. Top European News Riksbank hiked its Rate by 50bps to 0.75% as expected, and said the rate will be raised further and it will be close to 2% at the start of 2023. Bank said the balance sheet its to shrink faster than previously flagged, and suggested that policy rate will increase faster if needed. Click here for details. Riksbank's Ingves said inflation over forecast probably not enough for Riksbank to hold extra policy meeting in summer. Ingves added that if the situation requires a 75bps hike, then Riksbank will carry out a 75bps hike. Orsted Gains as HSBC Upgrades With Shares Seen ‘Good Value’ Aston Martin Extends Losses as Carmaker Reportedly Seeking Funds Climate Litigants Look Beyond Big Oil for Their Day in Court Ukraine Latest: Putin Warns NATO on Moving Military to Nordics FX DXY extends on gains above 105.00, but could see more upside on safe haven demand and residual rebalancing flows over fixes - EUR/USD inches towards 1.0400 to the downside. Yen regroups as yields drop and risk sentiment deteriorates to compound corrective price action. Franc unwinds some of its recent outperformance and Loonie lose traction from oil ahead of Canadian GDP. Swedish Crown unable to take advantage of hawkish Riksbank hike in face of risk aversion - Eur/Sek stuck in a rut close to 10.7000. Pound finds some underlying bids into 1.2100 and Kiwi at 0.6200, while Aussie holds above 0.6850 with encouragement from China’s services PMI that also propped the Yuan. Fixed Income Bonds on bull run into month, quarter and half year end - Bunds top 148.00 at best, Gilts approach 113.50 and 10 year T-note just a tick away from 118-00. Debt in demand on safe haven grounds rather than duration as curves steepen on less hawkish/more dovish market pricing. Italian supply comfortably covered to keep BTP futures propped ahead of US PCE data and yet another speech from ECB President Lagarde. Commodities WTI and Brent front-month futures are resilient to the broader risk downturn, and firmer Dollar as OPEC+ member members gear up for what is expected to be a smooth meeting. Spot gold is uneventful but dipped under yesterday's low, with potential support at the 15th June low at USD 1,806.59/oz. Base metals are softer across the board amid the broader risk profile. Dalian and Singapore iron ore futures were on track for quarterly losses. Ship with 7,000 tonnes of grain leaves Ukraine port, according to pro-Russia officials cited by AFP. US Event Calendar 08:30: June Initial Jobless Claims, est. 229,000, prior 229,000 08:30: June Continuing Claims, est. 1.32m, prior 1.32m 08:30: May Personal Income, est. 0.5%, prior 0.4% 08:30: May Personal Spending, est. 0.4%, prior 0.9% 08:30: May Real Personal Spending, est. -0.3%, prior 0.7% 08:30: May PCE Deflator MoM, est. 0.7%, prior 0.2% 08:30: May PCE Deflator YoY, est. 6.4%, prior 6.3% 08:30: May PCE Core Deflator YoY, est. 4.8%, prior 4.9% 08:30: May PCE Core Deflator MoM, est. 0.4%, prior 0.3% 09:45: June MNI Chicago PMI, est. 58.0, prior 60.3 DB's Jim Reid concludes the overnight wrap We’ve just released the results of our monthly EMR survey that we conducted at the start of the week. It makes for some interesting reading, and we’re now at the point where 90% of respondents are expecting a US recession by end-2023, which is up from just 35% in our December survey. That echoes our own economists’ view that we’re going to get a recession in H2 2023, and just shows how sentiment has shifted since the start of the year as central banks have begun hiking rates. When it comes to people’s views on where markets are headed next, most are expecting many of the themes from H1 to continue, with a 72% majority thinking that the S&P 500 is more likely to fall to 3,300 rather than rally to 4,500 from current levels, whilst 60% think that Treasury yields will hit 5% first rather than 1%. Click here to see the full results. When it comes to negative sentiment we’ll have to see what today brings us as we round out the first half of the year, but if everything remains unchanged today we’re currently set to end H1 with the S&P 500 off to its worst H1 since 1970 in total return terms. And there’s been little respite from bonds either, with US Treasuries now down by -9.79% since the start of the year, so it’s been bad news for traditional 60/40 type portfolios. Ultimately, a large reason for that has been investors’ fears that ongoing rate hikes to deal with inflation will end up leading to a recession, and yesterday saw a continuation of that theme, with Fed Chair Powell, ECB President Lagarde and BoE Governor Bailey all reiterating their intentions in a panel at the ECB’s Forum to return inflation back to target. In terms of that panel, there weren’t any major headlines on policy we weren’t already aware of, although there was a collective acknowledgement of the risk that inflation could become entrenched over time and the need to deal with that. Fed Chair Powell described the US economy as in “strong shape”, but one that ultimately requires much tighter financial conditions to bring inflation back to target. Year-end fed funds expectations remained steady in response, down just -0.7bps to 3.45%. However, further out the curve the simmering slower growth narrative continued to grip markets and sent 10yr Treasury yields -8.2bps lower to 3.09%, and the 2s10s another -1.1bps flatter to 4.7bps. In line with a tighter Fed policy path and slower growth, 10yr breakevens drove the move in nominal yields, falling -8.2bps to 2.39%, their lowest levels since January, having entirely erased the gains seen after Russia’s invasion of Ukraine, when it peaked above 3% at one point in April. Along with 2s10s flattening, the Fed’s preferred measure of the near-term risk of recession, the forward spread (the 18m3m – 3m), similarly flattened by -5.7bps, hitting its lowest level in nearly four months at 154bps. And thismorning there’s only been a partial reversal of these trends, with 10yr Treasury yields (+1.3bps) edging back up to 3.10% as we go to press. Over in equities, the S&P 500 bounced around but finished off of its intraday lows with just a -0.07% decline, again with the macro view likely skewed by quarter-end rebalancing of portfolios. The NASDAQ was similarly little changed on the day, falling a mere -0.03%. In terms of the ECB, President Lagarde said on that same panel that she didn’t think “we are going back to that environment of low inflation” that was present before the pandemic. But when it came to the actual data yesterday there was a pretty divergent picture. On the one hand, Spain’s CPI for June surprised significantly on the upside, with the annual inflation rising to +10.0% (vs. +8.7% expected) on the EU’s harmonised measure. But on the other, the report from Germany then surprised some way beneath expectations, coming in at +8.2% on the EU-harmonised measure (vs. +8.8% expected). So mixed messages ahead of the flash CPI print for the entire Euro Area tomorrow. As in the US, there was a significant rally in European sovereign bonds, with yields on 10yr bunds (-10.7bps), OATs (-10.7bps) and BTPs (-16.0bps) all moving lower on the day. Equities also lost significant ground amidst the risk-off tone, and the STOXX 600 shed -0.67% as it caught up with the US losses from the previous session. That risk-off tone was witnessed in credit as well, where iTraxx Crossover widened +21.5bps to a post-pandemic high. At the same time, there were further concerns in Europe on the energy side, with natural gas futures up by +8.06% to a three-month high of €139 per megawatt-hour, which follows a reduction in capacity yesterday at Norway’s Martin Linge field because of a compressor failure. Whilst monetary policy has been the main focus for markets lately, we did get some headlines on the fiscal side yesterday too, with a report from Bloomberg that Senate Democrats were working on an economic package that had smaller tax increases in order to reach a deal with moderate Democratic senator Joe Manchin. For reference, the Democrats only have a majority in the split 50-50 senate thanks to Vice President Harris’ tie-breaking vote, so they need every Democrat Senator on board in order to pass legislation. According to the report, the plan would be worth around $1 trillion, with half allocated to new spending, and the other half cutting the deficit by $500bn over the next decade. Overnight in Asia we’ve seen a mixed market performance overnight. Most indices are trading lower, including the Nikkei (-1.45%) and the Kospi (-0.81%), but Chinese equities have put in a stronger performance after an improvement in China’s PMIs in June, and the CSI 300 (+1.62%) and the Shanghai Comp (+1.31%) have both risen. That came as manufacturing activity expanded for the first time in four months, with the PMI up to 50.2 in June (vs. 50.5 expected) from 49.6 in May. At the same time, the non-manufacturing climbed to 54.7 points in June, up from 47.8 in May, which also marked the first time it’d been above the 50 mark since February. Nevertheless, that positivity among Chinese equities are proving the exception, with equity futures in the US and Europe pointing lower, with those on the S&P 500 (-0.28%) looking forward to a 4th consecutive daily decline as concerns about a recession persist. When it came to other data yesterday, the third estimate of US GDP for Q1 saw growth revised down to an annualised contraction of -1.6% (vs. -1.5% second estimate). Separately, the Euro Area’s M3 money supply grew by +5.6% year-on-year in May (vs. +5.8% expected), which is the slowest pace since February 2020. To the day ahead now, data releases include German retail sales for May and unemployment for June, French CPI for June, the Euro Area unemployment rate for May, Canadian GDP for April, whilst the US has personal income and personal spending for May, the weekly initial jobless claims, and the MNI Chicago PMI for June. Tyler Durden Thu, 06/30/2022 - 07:58.....»»

For the past 40 years or so, frontline workers in America have been getting a smaller and smaller slice of the economic pie. As corporate profits and executive compensation packages have soared, employees at many of the country’s biggest companies wound up taking an effective pay cut, year after year. Income growth for the bottom… For the past 40 years or so, frontline workers in America have been getting a smaller and smaller slice of the economic pie. As corporate profits and executive compensation packages have soared, employees at many of the country’s biggest companies wound up taking an effective pay cut, year after year. Income growth for the bottom 90 percent of American households has trailed gross domestic product growth for the past four decades, meaning that even as the country has gotten richer overall, most people have received a shrinking share of that wealth. Things are worst of all for those at the bottom. If the minimum wage had kept up with inflation it would be more than $25 an hour. Instead, it is stuck at $7.25. [time-brightcove not-tgx=”true”] In my new book, The Man Who Broke Capitalism, I trace this dramatic shift in our collective fortunes back to the reign of Jack Welch, who took over as the CEO of General Electric in 1981. Over the next 20 years, Welch reshaped the company and the economy, unleashing a series of mass layoffs and factory closures that destabilized the American working class, becoming the first CEO to use downsizing as a tool to improve corporate profitability, and embracing outsourcing and offshoring in an endless quest for cheap labor. And because GE was so influential, and Welch was so successful in his prime, these strategies became the de facto law of the land in corporate America. More than two decades after he retired, we are all still living in the world Jack Welch helped create. Today however, there are tentative signs that change is afoot. Some companies are investing in U.S. manufacturing, doing their part to combat climate change, and trying to clean up their supply chains. At a few select companies CEOs are even trying to push back on the forces that have led to such drastic income inequality in America and invest more in their workers. Companies like Target, Walmart and Chipotle have raised wages in recent years. And at PayPal, the online payments company, CEO Dan Schulman has embarked on an ambitious effort to improve the financial wellbeing of his frontline employees—going well beyond simply raising wages and creating a comprehensive financial wellness program that stands apart in corporate America. When Schulman took over PayPal, the online payments company, in 2014, he embraced the idealistic language of Silicon Valley, trumpeting a corporate mission statement that suggested technology could solve all the world’s problems. “Our mission as a company is to try and democratize the management and movement of money,” Schulman said. “It’s a very inclusive statement.” Schulman assumed that most all of PayPal’s employees were well off. After all, the company is worth more than $80 billion, and Silicon Valley behemoths are known for their generous compensation. But several years ago, Schulman learned that many of PayPal’s lowest-paid employees were having a hard time making ends meet. In 2017, the company set up a $5 million fund to help employees who were experiencing unexpected financial crises. As soon as the fund was announced, it was overwhelmed with applications. “We found urgent requests for help were increasingly the result of everyday events, like an unexpectedly steep medical bill, a student loan payment, or a car breaking down,” he told me. The next year, PayPal decided to survey its low-paid and entry-level employees, a group that included many men and women working in call centers, and which accounted for about half the company’s workforce. Schulman went into the exercise with high hopes. “I thought the results that would come back were going to be really good, because PayPal is a tech company, and we pay at or above market rates everywhere around the world because we want to attract really great employees,” he said. That was not the case. Two thirds of respondents said they were running short on cash between paychecks. “We got the survey results back and I was actually shocked to see that our hourly workers—like our call center employees, our entry-level employees—were just like the rest of the market, struggling to make ends meet,” he said. At an enormously profitable technology company, more than 10,000 employees were barely making enough to survive. “What we found out is that employees were making trade-offs, like do I get health care or do I put food on the table?” he said. “That’s ridiculous.” Schulman was stunned. “What it told me is that for about half our employees, the market wasn’t working. Capitalism wasn’t working.” Schulman resolved to do something, but he knew it wouldn’t be enough to just hand out some bonuses and hope for the best. Instead, he looked for data that would tell him whether or not whatever interventions PayPal devised were making a difference. He wanted a way to measure “the financial health of our employees” that went beyond basic metrics like the minimum wage, the purchasing power of which varies by zip code. Over the course of a few months, PayPal worked with academics and nonprofit groups to create a new metric: “net disposable income,” or NDI. That, Schulman explained, amounted to “how much money do you have after you pay all of your taxes and your essential living expenses, like housing and food and that kind of thing.” PayPal and its partners estimated that an NDI of 20 percent was about what was needed for a family to meet its needs—basics like rent and food, plus things like medical expenses, school supplies, and clothes—and still be able to save. With the new metric in hand, Schulman’s team revisited the survey data. The results were grim. About half of PayPal employees had an NDI of 4 percent, leaving them with just a small fraction of their paycheck after paying for basic necessities. It was a bleak statistic, but now Schulman had a target. The goal would be to get all PayPal employees to at least an NDI of 20 percent. There wasn’t one silver bullet that would easily accomplish that. Instead, PayPal created a four-part financial wellness program for its lower-paid employees that was unique among big companies. First, PayPal raised the wages for those employees with low NDIs. The company already paid above minimum wage everywhere it had offices, but that clearly wasn’t enough. So it upped hourly compensation for its call center workers. It then gave every employee, even entry-level ones, an opportunity to own stock in the company. That was hardly a token gesture. Given the disproportionate amount of value that is created through the appreciation of public company stock, it could be a meaningful way for workers to accumulate real wealth. And sure enough, PayPal stock doubled in the year after the program was introduced. Next, PayPal rolled out a comprehensive financial literacy program for its employees, offering pointers on saving, investing, and managing money. All of that was above and beyond what most big companies were doing, but Schulman then took one more critical step. One surprising finding from financial wellness survey was just how much health care was costing PayPal employees. Each month, workers had to choose between medical care and textbooks, between prescriptions and gas for the car. Health care costs were consuming a meaningful part of their NDI. So Schulman lowered health care costs for the company’s lowest-paid employees by 60 percent. It was the most impactful of PayPal’s interventions. “I think if we had just done health care, it would have been a gigantic relief for our employees,” Schulman said. Several months after the program was implemented, PayPal surveyed its employees again. This time, many of the targeted employees had net disposable income of more than 20 percent, with the lowest coming in at 16 percent. Many other companies have raised wages in recent years. What PayPal did was different. Between the raises, the stock grants, the financial literacy training, and the additional support for healthcare costs, Schulman and his team effectively rewrote the social contract with their lowest paid employees, proving that companies can still be highly profitable while taking exemplary care of their employees, too. The financial wellness program at PayPal cost tens of millions of dollars, money that didn’t go out the door in buybacks or dividends. “It was a significant material investment in our employees,” Schulman said. But he likened it to investments in other parts of the business, be it advertising or infrastructure. “I believe very strongly that the only sustainable competitive advantage that a company has is the skill set and the passion of their employees,” he said. Schulman insists that the expense was worth it. In the months after the program began, customer satisfaction ticked up, employees were more engaged, and PayPal’s stock continued to soar. And in recent months, PayPal has changed the vesting schedule for some of the stock awards to give employees more chances to cash out. “Over the medium and long term, that investment will pay back to shareholders,” Schulman said. “This whole idea that profit and purpose are at odds with each other is ridiculous. I mean, if you ever have any chance of moving from being a good company to a great company, you have to have the very best employees, that love what they’re doing, that are passionate about what they’re doing. Everything else will emanate from there.” Adapted from “The Man Who Broke Capitalism: How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America–and How to Undo His Legacy.”.....»»

On June 13, the price of gasoline reached a historic high of $5 per gallon. There followed an avalanche of accusations across the political spectrum. Democrats, including President Joe Biden, blamed oil companies for gouging consumers in order to boost their own profits. Republicans countered that the high prices were due to Biden’s mismanagement and… On June 13, the price of gasoline reached a historic high of $5 per gallon. There followed an avalanche of accusations across the political spectrum. Democrats, including President Joe Biden, blamed oil companies for gouging consumers in order to boost their own profits. Republicans countered that the high prices were due to Biden’s mismanagement and energy policies that discourage domestic oil production. In truth, neither side has accurately framed the current energy crisis. A complex array of economic, political, and geopolitical factors have converged to cause the national energy dilemma, which is unlikely to improve in the near future. [time-brightcove not-tgx=”true”] In Summer 2021, the price of gasoline nationwide was $3. A year later, it spiked to $5. What happened? To answer that question, it’s necessary to turn the clocks back to 2019, just before the COVID-19 pandemic. The world was awash in oil, thanks to the shale boom in the U.S. that had caused domestic production to double from 5 million barrels per day in 2008 to 12.3 million barrels per day in 2019. Then came COVID-19. In early 2020, demand for oil collapsed as the global economy went into lockdown. The price of oil fell to a historic low of -$30 in April. While oil producers in OPEC cut production, private oil companies cut costs and shed unprofitable assets. Some of those assets included aging refineries in the U.S. and Europe. As the global economy came back online in 2021, OPEC and private U.S. companies brought new oil onto the market very slowly. They had good reasons to be wary: the price had collapsed twice in a decade, COVID still wasn’t totally gone, and future demand looked uncertain due to growing concerns over climate change. Companies neglected investing in more capacity and instead offered dividends and buybacks to shareholders. Russia’s invasion of Ukraine in February 2022 threw a fragile global oil supply situation into utter chaos. The world’s second largest oil exporter, Russia, faced sanctions from the U.S., Canada, and the E.U. over its aggression. Millions of barrels of Russian crude suddenly went without a buyer. Global oil prices spiked to $130 per barrel. At the same time, the companies’ decision to shut down several oil refineries during the COVID slump left the U.S. with a deficit in refining capacity. While oil prices were high, the price of gasoline and diesel—in short supply for lack of operating refineries—was even higher. As gas prices spiked to $5, both sides of the American political spectrum point fingers. Democrats have been highly critical of private oil companies, arguing that the current high prices are the result of price gouging and corporate greed. Some have suggested creative economic policies to reduce U.S. exposure to the volatile global oil market, including windfall profit taxes and bans on oil and gasoline exports. While attacks from Democrats rightly point out the huge profits oil companies have earned from the current spike in prices, such windfalls are a product of oil’s volatile market and stem from forces outside the companies’ control. Some Democrat proposals such as an export ban on refined products would do little to mitigate crude oil prices, which are set on a global market, and would be counterproductive to lowering the price of refined goods like gasoline, since they would discourage further investment in domestic infrastructure. Republicans, on the other hand, have framed high prices as a result of Biden’s energy policies, which they contend have cut into US oil production. In his first year in office, Biden suspended new oil and gas leases on federal lands and canceled the Keystone XL pipeline, which would have carried crude oil from Canada to refineries in the Gulf Coast. “Unshackling” the industry would allow the U.S. to achieve “energy independence,” and avoid price shocks, they contend. Republican attacks on Biden are unwarranted. While it is true the President has undertaken several measures to limit the expansion of domestic oil production on federal land, such measures have not had an appreciable impact on oil output, which is set to exceed its historic high of 12.5m barrels per day in 2023. Oil executives have cited capital discipline, high costs, and scarce labor for holding back additional investment in new production. Claims that the U.S. could be energy independence obscure the fact that the price of oil is set by a global market, one that the U.S. cannot influence unilaterally. It is doubtful the U.S. could become self-sufficient in oil and gas, no matter how much it produces. President Biden’s response has been a mix of measures, from releasing oil from the Strategic Petroleum Reserve, to using federal power to encourage more investment in renewable energy to bring down demand for oil. On June 24, the administration proposed suspending the federal gasoline tax. In July, President Biden will visit Saudi Arabia, where he is expected to push Crown Prince Mohammed bin Salman to increase Saudi oil production in order to bring down world oil prices. Republican rhetoric aside, there is little the U.S. can do to bring down oil or gasoline prices in the short term. There are material constraints to boosting domestic oil production, and even with more output the U.S. cannot lower crude oil prices on its own. Similarly, President Biden’s gas tax holiday is unlikely to lower prices very much or for very long and may even contribute to the problem by encouraging more gasoline consumption at a time when supply and demand are extremely tight. Rather than boosting production or encouraging greater demand, the President could take positive steps to rein in demand and encourage conservation, short of triggering a recession. Improving energy efficiency, subsidizing public transportation, campaigns to promote energy conservation, or other fairly simple measures could all have an appreciable impact. Other policy measures, such as suspending the Jones Act—a century-old condition that restricts domestic energy from traveling by sea to U.S. ports—or taking control of private refining capacity in order to boost gasoline output for the domestic market would help alleviate high prices without adding to demand. The current shock was years in the making and stems from a variety of economic, political, and geopolitical factors, most of which lie outside U.S. control. Unless demand for gasoline falls, prices are likely to remain high throughout the summer—and beyond......»»

A return of 9.1% on private equity investments Highlights as at May 31, 2022: Share value at $52.61 (down $3.16 from December 31, 2021 and $0.60 from June 30, 2021); Annual return of -1.1%; Annual compound return to shareholders of 6.2% for 3 years, 6.8% for 5 years and 7.1% for 10 years; Comprehensive annual income of -$0.2 billion; Net assets of $17.4 billion; Investments of $1.4 billion to support the Québec economy; 748,371 shareholders-savers. MONTRÉAL, June 30, 2022 /CNW Telbec/ - For its fiscal year ended May 31, 2022, the Fonds de solidarité FTQ posted comprehensive income of $-0.2 billion. The annual return to shareholders is -1.1% (including -5.7% in the second half of the fiscal year). The value of the Fonds share is now $52.61. Net assets stand at $17.4 billion, representing growth of $0.2 billion over last year, while the number of shareholders-savers is 748,371, an increase of more than 24,000 in one year. The Fonds' annual compound return to shareholders (excluding tax credits) as at May 31, 2022, is -1.1% for 1 year, 6.2% for 3 years, 6.8% for 5 years and 7.1% for 10 years. "The annual return of 9.1% generated by the private equity portfolios helped offset some of the impact of the equity and bond markets," explained Fonds President and CEO Janie C. Beïque. "Despite ...Full story available on Benzinga.com.....»»

Fed Chair Jerome Powell said interest rate hikes are "highly likely to involve some pain," adding to investors' jitters about slower economic growth. Investors are increasingly worried about the US economy.Justin Sullivan/Getty Images US stock futures fell sharply Thursday, with the Dow dropping 340 points, as traders worried about a recession. Fed Chair Jerome Powell and other central bankers on Wednesday reiterated their commitment to taming inflation, even at the expense of growth. Longer-dated bond yields fell, in a sign investors expect central banks to have to cut interest rates in the future. US stock futures tumbled Thursday after Federal Reserve Chair Jerome Powell's tough talk on inflation sparked fresh concerns among investors about a recession.Dow Jones futures fell as much as 380 points and were down 1.11%, or 343 points, as of 6.00 a.m. ET. S&P 500 futures were 1.43% lower, and Nasdaq 100 futures were down 1.80%.European stocks dropped as economic fears also mounted on the continent, with the pan-continental Stoxx 600 down 1.82% in morning trading. Frankfurt's DAX lost 2.37%, while London's FTSE 100 was 1.80% lower.In Asia overnight, Tokyo's Nikkei 225 fell 1.54%. But China's CSI 300 bucked the trend and rose 1.44% on signs that the outlook is improving for the world's second-biggest economy.Strong words on inflation from the world's most important central bankers on Wednesday triggered the latest sell-off in stocks.Speaking at a European Central Bank conference in Portugal, Powell said the US economy remains strong. But he said there's "no guarantee" that it will avoid a sharp slowdown as the Fed hikes interest rates, underlining the central bank is prioritizing its efforts to tame inflation."The process is highly likely to involve some pain, but the worse pain would be in failing to address this high inflation and allowing it to become persistent," Powell said.ECB President Christine Lagarde and Bank of England Governor Andrew Bailey echoed Powell's commitment to controlling price rises, warning that red-hot inflation could become entrenched if they don't act decisively.Investors should prepare for more challenging months ahead, according to Mark Haefele, chief investment officer at UBS Wealth Management."There are a lot of potential outcomes for markets, but the only near certainty is that the path to the end of the year will be a volatile one," he told clients in a note.The yield on the key 10-year US Treasury note, which moves inversely to the price, fell almost 4 basis points Thursday to 3.057%. Analysts said the fall is a sign investors expect the Fed will be compelled to cut interest rates in the future as growth slows.The May reading on the core US personal consumption expenditure deflator is scheduled for release at 8.30 a.m. ET. Data on personal spending and income are also due."The release of the latest PCE index, a preferred Fed gauge of inflation, will provide further clues on consumers' willingness or otherwise to spend," said Richard Hunter, head of markets at trading platform Interactive Investor.Recent data has suggested this "vital cog of the US economy may be withdrawing in the face of higher energy and food prices," he added.Elsewhere, oil prices were little changed after falling Wednesday thanks to worries about growth and demand. WTI crude was roughly flat in choppy action at $109.44 a barrel, while Brent crude was trading at $112.32.The dollar index was up slightly at 105.17. Meanwhile, bitcoin traded below $20,000 as the dramatic crypto sell-off showed no signs of easing, and was last changing hands down 5% at $19,159.Read more: UBS and Credit Suisse are telling investors the bond market is stabilizing. Here's why this could bring a 10% rally in stocks — and 12 names that could capture the surge.Read the original article on Business Insider.....»»

Traders now expect the Federal Reserve to cut interest rates by 50 basis points in 2023 as economic growth slows sharply. Many analysts think the US is heading for a recession in 2023.Juanmonino/Getty Images Markets are flashing a warning: The Fed's quest to tame inflation will hit growth and force it to slash rates again. Traders shifted their expectations Wednesday, and now expect the Fed to cut interest rates by 50 basis points in 2023. The move comes after Fed Chair Jerome Powell said rate hikes are "highly likely to involve some pain." Financial markets are flashing a warning: The Federal Reserve's quest to tame inflation is going to whack economic growth within the year, and force the central bank to start slashing borrowing costs again in 2023.Fed Chair Jerome Powell warned on Wednesday that although the US economy is strong, "there's no guarantee" the central bank can raise interest rates sharply to tackle inflation without derailing growth."The process is highly likely to involve some pain," he said at a European Central Bank conference in Sintra, Portugal.Traders in the fed funds futures market were quick to respond. They expect the Fed to hike interest rates to a peak above 3.5% in March 2023 as it tries to bring down inflation, according to the prices of contracts listed by Bloomberg.But as of Thursday, traders expect the US central bank to have to start cutting interest rates in the middle of 2023 as growth slows, slashing them by around 50 basis points to roughly 3% by December of next year.Only a week earlier, the market expected the Fed's main interest rate to stand at around 3.2% by the end of 2023."The great and good at the ECB's Sintra conference have made it pretty clear they are more concerned about whacking inflation on the head than anything else, which isn't surprising, but does mean that downside growth risks will persist," said Kit Juckes, macro strategist at Societe Generale.The Fed's federal funds target range is currently 1.5% to 1.75%, after the central bank carried out the first 75 basis-point hike since 1994 earlier in June.In a Deutsche Bank survey of investors published Thursday, some 90% of respondents said they now expect a US recession before 2023 is done, up from just 35% six months ago."That echoes our own economists' view that we're going to get a recession in the second half of 2023, and just shows how sentiment has shifted since the start of the year as central banks have begun hiking rates," Deutsche Bank strategist Jim Reid said.One plus is that a recession is highly likely to cool red-hot inflation, which is running at a 41-year high of 8.6% in the US.Bond market investors now expect inflation to average 2.6% over the next five years, according to a measure known as the breakeven rate. That's down from 2.8% a week ago, and 3.6% in March.Not all analysts and traders expect a US recession, however. Many point to Americans' large build-up in savings during the pandemic, and say it should cushion the blow during any slowdown."Suggestions that a recession is imminent or inevitable are well wide of the mark," said Michael Pearce, senior US economist at Capital Economics.He said surveys of companies show the economy is still strong and that new business continues to flow. "Any recession, if it did occur in the next few years, would be mild," he said.Read more: Recession-proof investing: BlackRock equities chief reveals the 3 stock market sectors investors should target and a key theme the firm is focusing on as interest rates spikeRead the original article on Business Insider.....»»

The Mille Lacs Band of Ojibwe will receive a $3.1 million grant from the U.S. Department of Commerce's Economic Development Administration to fund the construction of tribal business incubators that will support startups and growing businesses. Mille Lacs Corporate Ventures, the business arm of the Mille Lacs Band, will use the grant to establish two business incubators as part of the Tribal Economy Business Incubator. Tribal leaders hope the project will help boost the local economy by giving….....»»

Who's Still Buying Fossil Fuels From Russia? Despite looming sanctions and import bans, Russia exported $97.7 billion worth of fossil fuels in the first 100 days since its invasion of Ukraine, at an average of $977 million per day. So, which fossil fuels are being exported by Russia, and who is importing these fuels? The infographic below, via Visual Capitalist's Niccolo Conte and Govind Bhutada, tracks the biggest importers of Russia’s fossil fuel exports during the first 100 days of the war based on data from the Centre for Research on Energy and Clean Air (CREA). In Demand: Russia’s Black Gold The global energy market has seen several cyclical shocks over the last few years. The gradual decline in upstream oil and gas investment followed by pandemic-induced production cuts led to a drop in supply, while people consumed more energy as economies reopened and winters got colder. Consequently, fossil fuel demand was rising even before Russia’s invasion of Ukraine, which exacerbated the market shock. Russia is the third-largest producer and second-largest exporter of crude oil. In the 100 days since the invasion, oil was by far Russia’s most valuable fossil fuel export, accounting for $48 billion or roughly half of the total export revenue.   While Russian crude oil is shipped on tankers, a network of pipelines transports Russian gas to Europe. In fact, Russia accounts for 41% of all natural gas imports to the EU, and some countries are almost exclusively dependent on Russian gas. Of the $25 billion exported in pipeline gas, 85% went to the EU. The Top Importers of Russian Fossil Fuels The EU bloc accounted for 61% of Russia’s fossil fuel export revenue during the 100-day period. Germany, Italy, and the Netherlands—members of both the EU and NATO—were among the largest importers, with only China surpassing them.   China overtook Germany as the largest importer, importing nearly 2 million barrels of discounted Russian oil per day in May—up 55% relative to a year ago. Similarly, Russia surpassed Saudi Arabia as China’s largest oil supplier. The biggest increase in imports came from India, buying 18% of all Russian oil exports during the 100-day period. A significant amount of the oil that goes to India is re-exported as refined products to the U.S. and Europe, which are trying to become independent of Russian imports. Reducing Reliance on Russia In response to the invasion of Ukraine, several countries have taken strict action against Russia through sanctions on exports, including fossil fuels.  The U.S. and Sweden have banned Russian fossil fuel imports entirely, with monthly import volumes down 100% and 99% in May relative to when the invasion began, respectively. On a global scale, monthly fossil fuel import volumes from Russia were down 15% in May, an indication of the negative political sentiment surrounding the country. It’s also worth noting that several European countries, including some of the largest importers over the 100-day period, have cut back on Russian fossil fuels. Besides the EU’s collective decision to reduce dependence on Russia, some countries have also refused the country’s ruble payment scheme, leading to a drop in imports. The import curtailment is likely to continue. The EU recently adopted a sixth sanction package against Russia, placing a complete ban on all Russian seaborne crude oil products. The ban, which covers 90% of the EU’s oil imports from Russia, will likely realize its full impact after a six-to-eight month period that permits the execution of existing contracts. While the EU is phasing out Russian oil, several European countries are heavily reliant on Russian gas. A full-fledged boycott on Russia’s fossil fuels would also hurt the European economy—therefore, the phase-out will likely be gradual, and subject to the changing geopolitical environment. Tyler Durden Thu, 06/30/2022 - 06:55.....»»

IEA: Europe Will Have To Cut Gas Usage By Nearly One-Third Authored by Julianne Geiger via OilPrice.com, In the first quarter of next year, the countries of the European Union will have to cut their usage of natural gas by up to 30% in preparation for a complete stoppage of Russian gas flows, according to the International Energy Agency (IEA).  IEA Director Fatih Birol on Tuesday said that “a complete cut-off of Russian gas supplies to Europe could result in storage fill levels being well below average ahead of the winter, leaving the EU in a very vulnerable position.”  “In the current context, I wouldn’t exclude a complete cut-off of gas exports to Europe from Russia,” he stated.  Citing technical issues related to the Nord Stream pipeline, Russia earlier in June cut flows of gas to Germany by 60%.  Plans to boost natural gas storage filling in Europe would not withstand a full Russian cut-off if it were to happen between now and the fourth quarter of this year.  By the first of November, the European Union should have its gas storage filled to 90%; however, a complete Russian cut-off would reduce that significantly, leading to another surge in natural gas prices, which have already tripled year-on-year, according to Bloomberg, citing figures from the ICE Endex.  European natural gas prices remained steady from Monday to Tuesday, in part due to a resumption of the flow of Russian gas through the TurkStream pipeline, which was undergoing maintenance. The pipeline has a 31.5-billion-cubic-meter capacity, Bloomberg reports.  On Tuesday, Dutch front-month gas futures dropped 0.2% at the close.  Also steadying natural gas prices in Europe on Tuesday were new estimations for demand, which could see a drop due to sunnier weather that can better support solar energy.  [ZH: Wednesday saw European NatGas re-accelerate as fears grew after Sweden and Finland were formally invited into NATO. EU NatGas is now trading at a 100% premium to US NatGas (in oil barrel equivs)...] This is not enough to calm nerves in Germany. Last week, German officials warned that the country is under threat of having to ration gas usage, which would have a devastating effect on the economy. German Minister for Economic Affairs Robert Habeck said the country had entered the “second alert level” of its emergency gas plan. “Even if we don’t feel it yet, we are in the midst of a gas crisis. From now on, gas is a scarce asset,” Habeck said in a statement, Fortune reported.  Tyler Durden Thu, 06/30/2022 - 03:30.....»»

Oil Market Confronts US And EU Policymakers With Daunting Choices: Kemp By John Kemp, senior energy analyst at Reuters With global inventories steadily falling and spare capacity eroding, the oil market resembles a geological fault line in which stress is quietly accumulating and will eventually be relieved by an earthquake of as yet unknown magnitude. The most likely stress relief will come from a deceleration in oil consumption as a result of a recession or mid-cycle manufacturing slowdown in the major oil consuming economies of North America, Europe and Asia. Economic growth is already slowing in the United States and faltering in Europe and China under the combined impact of accelerating inflation, rising interest rates and coronavirus controls. Financial conditions are tightening rapidly as central banks raise interest rates and commercial banks enforce tougher lending standards. Unlike previous cyclical slowdowns, central banks are likely to continue tightening financial conditions as the economy slows to snuff out inflation. The alternative is for a sharp acceleration of production ― meaning more output from OPEC members, U.S. shale producers, other non-OPEC suppliers, or currently sanctioned countries. Most OPEC members are already producing at full capacity, with the exception of Saudi Arabia and the United Arab Emirates. The precise amount of spare capacity available in Saudi Arabia and the United Arab Emirates is disputed given the secrecy which surrounds their production systems. But it is unlikely to be much more than around 1 million barrels per day (bpd) based on historic production rates (“Can Saudi Aramco Meet Its Oil Production Promises?”, Bloomberg, June 29). U.S. shale producers are already increasing drilling rates, which will translate into higher production over the next 6-12 months, once the wells have been drilled, fractured and linked up to pipeline systems. The largest shale producers remain committed to restraining output growth to avoid flooding the market and return capital to shareholders, which is likely to limit growth from this source. Non-OPEC non-shale producers (NONS) are expected to increase production by under 1 million bpd in both 2022 and 2023 (“EIA forecasts growing liquid fuels production in Brazil, Canada and China”, EIA, June 17). The only other source of increased production would come from easing sanctions on Venezuela, Iran or Russia, which could add several million barrels daily to the market depending on which sanctions were relaxed. ACCUMULATING STRESS Brent’s spot price and calendar spreads are sending contrasting signals about the tightness of oil supplies, implying the market is storing up volatility which is likely to be unleashed over the next few months. Front-month futures prices are high, but not extremely so once adjusted for inflation, lying in the 85th percentile for all months since 1990 and the 78th percentile for all months since 2000. The implication is the market is short of petroleum but the shortfall is not (yet) critical and expected to be resolved relatively easily by an increase in production, a reduction in consumption, or both. But Brent’s six-month calendar spread, usually seen as a clearer signal about the balance between production, consumption, inventories and spare capacity, is trading near record levels. Brent spreads are signalling the market is already exceptionally tight, with shortages becoming critical and difficult to relieve without a massive increase in output, a recession-driven fall in consumption, or both. Other calendar spreads, including the very short-term dated Brent spreads for cargoes scheduled to load in the next few weeks, and Murban crude futures, the benchmark in Asia, are already at record levels. The tightness in some of these short-term spreads is likely exaggerated by squeezes, so the price structures should be interpreted with care, but squeezes would not be possible if the market was not under-supplied. Critical calendar spreads are signalling an extreme shortage of crude - even though the U.S. Strategic Petroleum Reserve (SPR) is discharging 1 million barrels per day until the end of October. Spreads signal the production-consumption balance is expected to be far tighter than in either 2012-2014 or 2007-2008, the last time that real oil prices were this high. The contradiction between spot prices and spreads must eventually be resolved, which will likely induce significant volatility: either spot prices must rise to align with tightness implied by the calendar spreads, or the spreads must soften to match the more evenly balanced market implied by spot prices. TIME TO CHOOSE The oil market is confronting policymakers with a menu of options. But each of them carries a high cost in terms of diplomacy, domestic politics, the economy, or all three, making them unpalatable for decision-makers. This explains why "clever" technical solutions that appear to avoid these hard choices are so popular at the moment in the United States and the European Union. The proposed price cap on Russia’s petroleum exports is designed to reduce Russia’s revenues without reducing oil supply, raising prices, increasing the need for a recession, or relaxing sanctions on Iran or Venezuela. But the feasibility of these technical solutions falls as their complexity increases. It is like going into a restaurant, ordering all the items on the menu, and then being surprised the eventual bill is so high. In the recent past, stringent U.S.-led sanctions on Iran between 2012 and 2015 contributed to the period of very high real prices between 2012 and 2014. Sanctions have invariably driven up energy prices for consumers unless there are alternative supplies readily available to make up the deficit (“Energy sanctions and the impact on prices for consumers”, Kemp, June 2022). In the current market, there is very limited spare capacity, unless and until a recessionary slowdown in the global economy and oil consumption creates some more slack. U.S. and EU policymakers must therefore choose - tougher sanctions on Russia; easier sanctions on Venezuela and Iran; faster production growth from Saudi Arabia and the UAE; faster growth from U.S. shale; or a deeper recession. Tyler Durden Thu, 06/30/2022 - 05:00.....»»

Stock futures are trading lower ahead of June's final trading day after the U.S. economy contracted more than expected amid high inflation and weakening consumer confidence......»»

As the epidemic draws to a close, the world is looking forward to a rebound. In the fourth quarter of 2021, the World Monetary Fund (IMF) forecast that the global economy would grow at 4.9% in 2022. But in April it lowered the growth to 3.6% from 4.4% forecast in early 2022......»»

The Airbus A380-800 is the world's largest passenger aircraft with a maximum capacity of 853. It seats 193 more passengers than the Boeing 747-400. A Singapore Airlines Airbus A380-800.C. v. Grinsven/SOPA Images/LightRocket/Getty Images Six of the world's largest passenger aircraft are made by European manufacturer Airbus. The Airbus A380-800 is the world's largest passenger aircraft with a maximum capacity of 853. It seats 193 more passengers than the second-largest passenger plane, the Boeing 747-400. Only two manufacturers — Airbus and Boeing — are behind 10 of the world's largest passenger planes.Airbus and Boeing factories.Marcus Brandt/picture alliance/Liu Guanguan/China News Service/Getty ImagesThe world's first-ever jumbo jet, the Boeing 747, was constructed by American aircraft manufacturer Boeing in 1970. Over 50 years later, the airline industry is saturated by widebody aircraft constructed by two major manufacturers: Boeing and Europe's Airbus.Some 4,800 widebody aircraft are currently in use worldwide. The number is expected to grow in the next decade to around 7,000 jets.In 2007, Airbus, the world's biggest commercial plane manufacturer, introduced the world's largest commercial aircraft by passenger capacity — the A380-800.Take a look at the 10 of the world's largest passenger planes. The models are arranged in ascending order according to their maximum capacity and their number of seats in either a two or three-class seating arrangement.10. Airbus A330-300A Delta Airlines Airbus A330-300 aircraft.Nicolas Economou/NurPhoto/Getty ImagesThe A330-300 is the first variant of the A330. It first took flight in January 1994.The wide-body aircraft is currently used by dozens of airlines, including Cathay Pacific, China Airlines, Korea Air, and Virgin Atlantic. It has a maximum seating of 440 and a typical seating capacity between three classes of 250 to 290.The European-made plane has an overall length of 208 feet and 10 inches (63.66 meters), a height of 55 feet and one inch (16.79 meters), and a wing span of 197 feet and 10 inches (60.3 meters).  9. Airbus A340-300A Cathay Pacific Airbus A340-300 aircraft.Contributor/aviation-images.com/Universal Images Group via Getty ImagesThe A340-300 is a variant of the ultra-long-range A340. It first took flight in October 1991.Around 54 of the aircraft were in service as of March. Operators of the plane include German airline Lufthansa. The plane has a maximum seating of 440 and typical seating between three classes (first, business, and economy) of 250 to 290.It has an overall length of 208 feet and 11 inches (63.69 meters), a height of 55 feet and nine inches (16.99 meters), and a wingspan of 197 feet and 10 inches (60.30 meters).8. Airbus A340-500A Hi Fly Malta Airbus A340-500.santirf/iStock Editorial/Getty Images PlusThe A340-500 was the world's longest-range passenger plane when it was first introduced in 2002. The aircraft has a maximum range of 9,000 nautical miles.It has a maximum seating of 440, with typical seating between three classes (first, business, and economy) of 270 to 310.Currently, only one A340-500 is still in active service, and it is used by Azerbaijan Air, according to the aviation website Simple Flying.The plane has a length of 222 feet and 10 inches (67.93 meters), a height of 56 feet and eight inches (17.53 meters), and a wingspan of 208 feet and two inches (63.45 meters).7. Boeing 777-200LRAn Emirates Boeing 777-200LR aircraft.winhorse/Editorial RF/Getty ImagesReleased in 2006, the Boeing 777-200 was the world's longest-range commercial plane at the time. It is a variant of Boeing's flagship 777 model.Airlines like Air Canada, Emirates, and Qatar Airways continue to use the model. It has a maximum capacity of 440 and typical seating between two classes (business and economy) of 317.The plane has a length of 209 feet and one inch (63.7 meters), a height of 61 feet and one inch (18.6 meters), and a wingspan of 212 feet and seven inches (64.8 meters).6. Airbus A350-900Lufthansa Airbus A350-900.Joel Serre/iStock Editorial/Getty Images PlusThe A350-900 is the first variant of the A350, which was developed to compete with the Boeing 787 Dreamliner. It has a maximum seating of 440 and typical seating between three classes (first, business, and economy) of 300 to 350.Airlines that use the model include Singapore Airlines, Delta Airlines, Qatar Airways, and Cathay Pacific.The plane has an overall length of 219 feet and two inches (66.8 meters), a height of 55 feet and 11 inches (17.05 meters), and a wingspan of 212 feet and five inches (64.75 meters). 5. Airbus A340-600An Airbus A340-600 operated by Virgin Atlantic.Stefan Irvine/LightRocket/Getty ImagesThe A340-600 is the largest-capacity variant of the A340. It has a maximum seating of 475, and its typical seating between three classes (first, business, and economy) ranges from 320 and 370. Airlines that use the model include Lufthansa.The plane has an overall length of 247 meters and three inches (75.36 meters), a height of 58 feet and 10 inches (17.93 meters), and a wingspan of 208 feet and two inches (63.45 meters).4. Boeing 777-300ERA KLM Royal Dutch Airlines Boeing 777-300.Nicolas Economou/NurPhoto/Getty ImagesThe first 777-300ER, a variant of the 777, was first delivered in April 2004. Airlines like Singapore Airlines and United Airlines continue to use the model.It has a maximum capacity of 550 passengers and typical seating between two classes (business and economy) of 396.The plane has a length of 242 feet and four inches (73.9 meters), a height of 60 feet and eight inches (18.5 meters), and a wingspan 21 feet and five inches (64.75 meters).3. Boeing 747-8An Air China Boeing 747-8 aircraft.Nicolas Economou/NurPhoto/Getty ImagesAt the time of its introduction as a passenger aircraft in 2012, the 747-8 was the largest variant of the 747. The plane has a length of 250 feet and two inches (76.3 meters), a height of 63 feet and six inches (19.4 meters), and a wingspan of 224 feet and five inches (68.4 meters).It has a maximum capacity of 605, and typical seating between three classes (first, business, and economy) of 467. As of 2020, airlines like Air China, Korean Air, and Lufthansa continue to operate the model.2. Boeing 747-400A British Airways Boeing 747-400.Nicolas Economou/NurPhoto/Getty ImagesThe 747-400 was first introduced in 1989. The plane is now more commonly used to transport cargo, but airlines like Asiana Airlines and Lufthansa continue to use the model for passenger flights.The plane measures 321 feet and 10 inches (70.66 meters) in length, 63 feet and six inches (19.40 meters) in height, and has a wingspan of 211 feet and five inches (64.44 meters).It has a maximum capacity of 660 and typical seating between three classes (first, business, and economy) of 416. 1. Airbus A380-800A Singapore Airlines Airbus A380-800.SOPA Images/Contributor/Getty ImagesThe A380-800, which was first introduced in 2007, is the world's largest passenger aircraft.While production of the model ceased in 2021, it continues to be used by airlines like Emirates, Singapore Airlines, and British Airways. There were 254 units built in total.The superjumbo jet has an overall length of 72.7 meters, a height of 24.1 meters, and a wingspan of 79.8 meters. It has a maximum capacity of 853 and typical seating between four classes (first, business, premium economy, and economy) of 545.Read the original article on Business Insider.....»»

"Our country has a large population. Such strategies as 'herd immunity' and 'lying flat' would lead to consequences that are unimaginable," Xi said. Chinese President Xi Jinping has called his country's "zero Covid" policy "scientific and effective."Xie Huanchi/Xinhua via Getty Images China will continue sticking to its "zero Covid" policy, Chinese President Xi Jinping said Tuesday. This is despite the economic risks that come with the strategy, he added during a visit to Wuhan. He said taking a "herd immunity" approach in China could lead to "unimaginable" consequences. China will stick to its controversial "zero Covid" policy even if it means hurting the country's economy, Chinese President Xi Jinping said on Tuesday."We would rather temporarily affect a little economic development than risk harming people's life safety and physical health, especially the elderly and children," he said during a visit to Wuhan, the city where COVID-19 was first detected, per state news agency Xinhua. "Our country has a large population. Such strategies as 'herd immunity' and 'lying flat' would lead to consequences that are unimaginable," he continued. Both herd immunity as well as "lying flat" — Chinese slang for doing the bare minimum — refers to strategies that involve living with the virus.Xi also reaffirmed China's "zero Covid" policy last month, calling it "scientific and effective."China's strategy, which involves sudden lockdowns and mass testing, was largely successful at the start of the pandemic, with citizens enjoying relatively normal lives while the rest of the world struggled to contain Covid outbreaks. The country's Covid death toll of 14,625 is also low compared to other countries. The US, for example, has recorded more than 1 million Covid deaths. However, China's recent attempts to completely stamp out the coronavirus have proven ineffective due to the highly transmissible Omicron variant — and citizens are losing patience.For instance, the authorities' chaotic handling of Shanghai's Covid outbreak in April and May — including a harsh policy that separated parents from their Covid-positive children — has led to widespread anger and frustration. Last month, the World Health Organization head, Dr. Tedros Adhanom Ghebreyesus, said China's "zero Covid" strategy was "not sustainable," in a rare criticism of a government's handling of the virus.Read the original article on Business Insider.....»»

Churches Across US Build Tiny Home Villages Amid Worsening Affordability Crisis Churches across the US are working with homeless charities to construct tiny home communities amid one of the worst housing affordability crises ever.  AP News says churches are using spare land to build tiny home communities to accommodate the homeless.  On vacant plots near their parking lots and steepled sanctuaries, congregations are building everything from fixed and fully contained micro homes to petite, moveable cabins, and several other styles of small-footprint dwellings in between. Church leaders are not just trying to be more neighborly. The drive to provide shelter is rooted in their beliefs — they must care for the vulnerable, especially those without homes. -AP More than half a million Americans were homeless in 2020, and the number has likely climbed as shelter costs if renting or owning have exploded, triggering the worst ever housing affordability crisis on record. As we've previously noted, soaring shelter costs force people into homelessness.  Days ago, we outlined how a tidal wave of evictions could be ahead with 8.4 million Americans, or about 15% of all renters were behind rent payments. Of that, 3.5 million said they could be evicted within the next two months. Unlike the pandemic, the federal eviction moratorium prevented people from ending up on the streets, though the moratorium has since expired during the worst inflation storm in four decades.  Jeff O'Rourke, lead pastor of Mosaic Christian Community in St. Paul, Minnesota, embraced tiny homes as a housing solution. He said his church uses "every square inch of property that we have to be hospitable."  Meridian Baptist Church in El Cajon, California, partnered with local nonprofit Amikas to construct a tiny home community to address the homelessness crisis.  In the San Francisco Bay Area, Firm Foundation Community Housing, launched by Rev. Jake Medcalf, has erected a tiny home housing community in the parking lot of First Presbyterian Church of Hayward.  The First Christian Church of Tacoma in Washington erected an entire village of tiny homes in their parking lot. "We don't have a lot of money. We don't have a whole lot of people … but we care a lot about it, and we've got this piece of property," said the Rev. Doug Collins, the church's senior minister. Donald Whitehead, director of the National Coalition for the Homeless, told AP the move by churches across the country to build tiny home communities is a "great emergency option" amid today's economy that hasn't worked for everyone.  Maybe all of these tiny home communities springing up at US churches should be dubbed "Bidenvilles," similar to the shacktowns built during the Great Depression in the 1930s called "Hoovervilles."  More of these communities will be constructed as the eviction tidal wave nears.  Tyler Durden Wed, 06/29/2022 - 22:40.....»»

Part of the uncertainty in the market at present is related to how earnings estimates should evolve in an aggressive Fed tightening cycle. The market has a sense of what should happen to earnings estimates, but it isn't seeing much of that just yet... Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>Here are the key points: For 2022 Q2, total S&P 500 earnings are expected to increase +2.5% from the same period last year on +10.8% higher revenues and net margin compression of 103 basis points. Excluding the hefty contribution from the Energy sector, total Q2 earnings for the rest of the S&P 500 index are expected to be down -4.8% on +8.6% higher revenues. Q2 Earnings estimates for the index as a whole are only modestly down since the start of the quarter, but they are down significantly on an ex-Energy basis. Part of the uncertainty in the market at present is related to how earnings estimates should evolve in an aggressive Fed tightening cycle. The market has a sense of what should happen to earnings estimates, but it isn’t seeing much of that just yet.The natural order of things is that rising interest rates take the edge off of aggregate demand, causing the economy to start cooling off. Businesses start experiencing this changed ground reality in their normal operations, which shows up in their quarterly numbers and management’s guidance.We have started seeing some of that already. For example, recent quarterly results and guidance from the likes of Nike NKE, Bed Bath & Beyond BBBY, and Lennar LEN could be indicative of many more such reports as the June-quarter reporting cycle really gets going in a couple of weeks. That said, not every early reporting company is missing estimates or guiding lower, as we saw in the results from Oracle ORCL, FedEx FDX and General Mills GIS.To get a sense of the revisions trend, it is instructive to look past the index level aggregate picture and drill a little deeper. The reason we need to do that is the unprecedented positive revisions to the Energy sector as a result of spiking oil and other energy commodity prices. The resulting Energy sector gains have been camouflaging weakening earnings trends in other sectors.This becomes clear if we look at how full-year 2022 earnings estimates for the S&P 500 index have evolved since the start of the year. The chart below shows how we reached the current aggregate earnings total of $2,005.2 billion for the index since January 1st.Image Source: Zacks Investment ResearchThe only way the above positive revisions trend makes sense is if we zero in on the revisions trend for the Energy sector, which you can see in the chart below.Image Source: Zacks Investment ResearchThe chart below shows us the aggregate revisions trend for the S&P 500 index on an ex-Energy basis.Image Source: Zacks Investment ResearchThe reality is that 2022 earnings estimates for half of the 16 Zacks sectors have come down since the start of the year, with the biggest declines for the Consumer Discretionary, Retail and Aerospace sectors.Aggregate Energy sector earnings estimates for the year have increased by +73.4% since the start of the year. Other sectors enjoying significant positive revisions since the start of the year include Basic Materials, Autos, Consumer Staples and Construction.In the aggregate, S&P 500 earnings estimates for the year outside of the Energy sector have been cut -9.8% since the start of the year.It is reasonable to expect estimates to come down further as the economy slows down in response to aggressive tightening. But it is inaccurate to claim that estimates have not come down. They have, as we show above.The Overall Earnings PictureBeyond Q2, the growth picture is expected to modestly improve, as you can see in the chart below that provides a big-picture view of earnings on a quarterly basis.Image Source: Zacks Investment ResearchThe chart below shows the overall earnings picture on an annual basis, with the growth momentum expected to continue.Image Source: Zacks Investment ResearchAs strong as the full-year 2022 earnings growth picture is expected to be, it’s worth remembering that a big part of it is due to the unprecedented Energy sector momentum. Excluding the Energy sector, full-year 2022 earnings growth for the remainder of the index drops to only +3.8%.There is a rising degree of uncertainty about the outlook, reflecting a lack of macroeconomic visibility in a backdrop of Fed monetary policy tightening. The evolving earnings revisions trend will reflect this macro backdrop. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NIKE, Inc. (NKE): Free Stock Analysis Report General Mills, Inc. (GIS): Free Stock Analysis Report Oracle Corporation (ORCL): Free Stock Analysis Report FedEx Corporation (FDX): Free Stock Analysis Report Bed Bath & Beyond Inc. (BBBY): Free Stock Analysis Report Lennar Corporation (LEN): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Part of the uncertainty in the market at present is related to how earnings estimates should evolve in an aggressive Fed tightening cycle. The market has a sense of what should happen to earnings estimates, but it isn't seeing much of that just yet... Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>Here are the key points: For 2022 Q2, total S&P 500 earnings are expected to increase +2.5% from the same period last year on +10.8% higher revenues and net margin compression of 103 basis points. Excluding the hefty contribution from the Energy sector, total Q2 earnings for the rest of the S&P 500 index are expected to be down -4.8% on +8.6% higher revenues. Q2 Earnings estimates for the index as a whole are only modestly down since the start of the quarter, but they are down significantly on an ex-Energy basis. Part of the uncertainty in the market at present is related to how earnings estimates should evolve in an aggressive Fed tightening cycle. The market has a sense of what should happen to earnings estimates, but it isn’t seeing much of that just yet.The natural order of things is that rising interest rates take the edge off of aggregate demand, causing the economy to start cooling off. Businesses start experiencing this changed ground reality in their normal operations, which shows up in their quarterly numbers and management’s guidance.We have started seeing some of that already. For example, recent quarterly results and guidance from the likes of Nike NKE, Bed Bath & Beyond BBBY, and Lennar LEN could be indicative of many more such reports as the June-quarter reporting cycle really gets going in a couple of weeks. That said, not every early reporting company is missing estimates or guiding lower, as we saw in the results from Oracle ORCL, FedEx FDX and General Mills GIS.To get a sense of the revisions trend, it is instructive to look past the index level aggregate picture and drill a little deeper. The reason we need to do that is the unprecedented positive revisions to the Energy sector as a result of spiking oil and other energy commodity prices. The resulting Energy sector gains have been camouflaging weakening earnings trends in other sectors.This becomes clear if we look at how full-year 2022 earnings estimates for the S&P 500 index have evolved since the start of the year. The chart below shows how we reached the current aggregate earnings total of $2,005.2 billion for the index since January 1st.Image Source: Zacks Investment ResearchThe only way the above positive revisions trend makes sense is if we zero in on the revisions trend for the Energy sector, which you can see in the chart below.Image Source: Zacks Investment ResearchThe chart below shows us the aggregate revisions trend for the S&P 500 index on an ex-Energy basis.Image Source: Zacks Investment ResearchThe reality is that 2022 earnings estimates for half of the 16 Zacks sectors have come down since the start of the year, with the biggest declines for the Consumer Discretionary, Retail and Aerospace sectors.Aggregate Energy sector earnings estimates for the year have increased by +73.4% since the start of the year. Other sectors enjoying significant positive revisions since the start of the year include Basic Materials, Autos, Consumer Staples and Construction.In the aggregate, S&P 500 earnings estimates for the year outside of the Energy sector have been cut -9.8% since the start of the year.It is reasonable to expect estimates to come down further as the economy slows down in response to aggressive tightening. But it is inaccurate to claim that estimates have not come down. They have, as we show above.The Overall Earnings PictureBeyond Q2, the growth picture is expected to modestly improve, as you can see in the chart below that provides a big-picture view of earnings on a quarterly basis.Image Source: Zacks Investment ResearchThe chart below shows the overall earnings picture on an annual basis, with the growth momentum expected to continue.Image Source: Zacks Investment ResearchAs strong as the full-year 2022 earnings growth picture is expected to be, it’s worth remembering that a big part of it is due to the unprecedented Energy sector momentum. Excluding the Energy sector, full-year 2022 earnings growth for the remainder of the index drops to only +3.8%.There is a rising degree of uncertainty about the outlook, reflecting a lack of macroeconomic visibility in a backdrop of Fed monetary policy tightening. The evolving earnings revisions trend will reflect this macro backdrop. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NIKE, Inc. (NKE): Free Stock Analysis Report General Mills, Inc. (GIS): Free Stock Analysis Report Oracle Corporation (ORCL): Free Stock Analysis Report FedEx Corporation (FDX): Free Stock Analysis Report Bed Bath & Beyond Inc. (BBBY): Free Stock Analysis Report Lennar Corporation (LEN): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

G-7 & The Desperation Stage Of Russian Sanctions Authored by Jack Rasmus via Counterpunch.org, Biden and the other G7 leaders are meeting in the Bavarian Alps this week. Apart from proclaiming they’ll never give up supporting Zelensky and Ukraine, G7 leaders announced they were planning two new sanctions on Russia. Like most of the previous six phases of sanctions the purpose of the latest is to deprive Russia of revenues from exports. So far sanctions haven’t been all that successful in that regard, at least in the shorter term. While the USA has banned Russian oil and gas imports to the USA, those amounts and their respective revenue impact on total Russian export revenue is insignificant. Moreover, the ban on Russian oil exports to Europe do not begin until December 2022, while there’s no ban on Russian natural gas imports whatsoever. So little net impact on Russian energy export revenues from Europe either. The sanctions on oil & gas Russian exports to Europe have been quite minimal to date. Meanwhile, Russia’s exports to China, India and rest of the world have been rising. As have global energy prices in general.  With accelerating global prices for oil and gas, and an increase in Russian energy exports to India, China and elsewhere, Russia’s revenues have been actually rising. This rising revenue despite sanctions has presented something of a conundrum for Biden and the G7. The whole idea of sanctions is to dramatically reduce Russian revenues, not simply volume of exports! Sanctions thus far have had the opposite effect of what was intended—Russian energy revenues have risen not fallen. So the G7 in Bavaria have come up with two more schemes to try to reduce Russian export revenues. But the thin mountain air must be affecting their thinking. The two new schemes are among the most desperate and economically absurd sanction ideas spawned thus far. 1. Ban Russian Gold Exports to Europe The first absurd proposal being bandied about in Bavaria is to get Europe to agree to ban Russian gold exports to Europe. The thinking is Russian revenues from gold constitute Russia’s second largest export revenue source, but at $20 billion a year gold sales revenue is still well below Russia’s oil export revenue of around $90 billion (before sanctions). Most of the Russian gold exports goes to the gold exchange in London where it’s ‘sold’ by Russia in exchange for other currencies. The G7 thinks denying Russia access to the London gold exchange will result in a big dent in its total export revenues and ability to obtain other currencies with which to purchase other needed imports for its economy. But there are problems with the G7’s proposed ban on Russia gold exports. First, Russia could just as well sell its gold elsewhere in the world. It doesn’t have to sell it to the Europeans at the London exchange. Other major global buyers of Russian gold are Turkey, Qatar, India and other middle eastern markets. Gold prices have been rising globally, as inflation has driven up oil, gas, and other industrial and agricultural commodities. Gold is an asset that tends to rise in price with rising general price levels, which are now accelerating worldwide. With inflation, other countries will more than gladly buy up the Europeans’ share of Russian gold. Some may even then sell the gold back to the Europeans—at a marked up higher price of course. The Demand for Russian gold will simply shift, from Europe to elsewhere. Russian gold export revenues will thus not fall on net; in fact, may possibly even rise as gold prices continue to rise with inflation–ironically in large part due to other sanctions in general. Second, gold is an asset that provides a hedge against inflation. It may be that Biden can get the G7 leaders and their governments (and central banks) to boycott buying Russian gold. But what’s to stop individual investors in Europe from buying Russian gold in offshore markets, when it’s presently such an attractive asset? Will Biden extend sanctions on all the individual Europeans who simply shift their purchases of Russian gold from the London Gold Exchange to the gold exchanges in Turkey, Qatar and elsewhere? 2. Price Cap Russian Oil Exports to Europe This is an even sillier proposal. Here’s the logic of how the price cap is supposed to work. Theoretically, Europe would all agree to buy Russian oil exports over the next six months but only at a deeply discounted price that all of Europe would agree on. In other words, set a ‘price cap’ at a level well below world market prices that are currently determined by supply in global oil spot markets. The lower price is supposed to cut Russian revenues from the oil exports to Europe—i.e. reduce revenues, the prime goal of all sanctions. The idea was first suggested by Janet Yellen, the US Secretary of the Treasury. That’s the Janet Yellen who told the world in February 2022 that inflation was temporary, remember! Getting all of the G7 to agree to a price cap still requires getting the rest of Europe as well as Japan, So. Korea and others to agree to that price capt as well.   But isn’t Europe supposed to stop buying all Russian oil imports by end of 2022 per previous sanctions they’ve agreed to? Who believes the Europeans can agree to a price cap on Russian oil and implement that cap in three months (July-September)–and then for just three months more (October-December)? Europe can’t do anything in three months, or even six. Maybe the US and EU aren’t all that confident they can implement a full ban on Russian oil exports by December? But even this isn’t the most absurd aspect of the ‘price cap’ proposal. Assuming Biden could get all the G7 to convince all of Europe’s 27 nations on a super discounted price, there’s still the ‘small problem’ of what Russia’s response might be to all that. The G7’s faulty logic is the deep discounted price Europe is only willing to pay for the oil would be at a price much lower than even the 30% discount that Russia is now selling oil to India, China and elsewhere. The G7 presumably would offer to buy Russian oil only at a 50% discount off current world prices maybe? That would put pressure, as the G7 argument goes, on Russian oil sales to India etc. The Indians would then demand Russia oil prices at the G7 lower 50% discount price. Russia would realize further reduced revenues from oil lower prices to India, China, the rest of the world as well as to G7 and Europe. This is a proposal so ridiculous it’s almost embarrassing. The problem with the G7 ‘price cap’ idea is there’s no reason why Russia would want to sell any oil whatsoever to Europe at the G7’s deeply discounted price cap level. First, why should it when Europe says it plans to phase out all Russian oil by December anyway? Second, Russia has shown it is not concerned with reducing natural gas export revenues to Europe. It’s already cut cubic gas exports to Europe by one-third as part of its own economic response to Europe’s agreement with US sanctions on Russia and it’s warned Europe of another third soon.  Economic warfare cuts both ways. So what’s to stop Russia from just cutting off all oil exports to Europe—and well before December? Third, Russia would have to be pretty dumb to agree to sell oil to Europe at the latter’s ‘price cap’ level which would be well below Russia’s already 30% discount oil price sales to India? It knows the likely knock on effect that would follow. India as a long term oil customer is far more important to Russia than Europe which says it’s ending as a customer in just six months.  Finally, Russia knows if it cuts off all oil exports to Europe, it would just change the market flow of global oil, not reduce it. Russia would sell more to other countries, which might then just re-export it back to Europe in turn. In short, the error with the G7 price cap idea is it assumes that buyers (Europe) can set the price for oil in what is a global sellers market! G7 may think they can stand market fundamentals on their head and make it work, but they are wrong.  No amount of G7 wishful thinking can make Demand determine Supply in today’s global energy markets, where broken and restructuring supply chains, sanctions, and war are the main determinants of price. Both the proposal to ban Russian gold exports to Europe and the proposal to manipulate oil demand to reduce its global market price—and thereby deprive Russia of revenues—are ideas that reflect more the desperation of the US and G7 to find some way to make sanctions on Russia work in the short run when thus far they aren’t working very well, if at all. The short run objective of sanctions–i.e. to reduce Russian export revenues–has not been working but the two latest desperate ideas won’t work any better. Historians will wonder years from now why the US and its most dependent allies in tow—the G7 countries—embarked upon a scope of sanctions on Russia so soon after Covid’s deep negative impacts on global supply chains and domestic product and labor markets. Global markets, trade and financial flows were seriously disrupted by the Covid experience of 2020-21. And they had not recovered by January 2022 when US sanctions on Russia were escalated. Before global supply chains could heal, the US and its G7 allies embarked on sanctions that further disrupted and restructured those same supply chains while simultaneously setting off chronic global inflation that ravaged their domestic economies as well. History will show, it was all not well thought out. Even less thought out, however, are the more recent G7 proposals to ban Russian gold and engineer a price cap on global oil—the latter in effect a fantasy that by somehow manipulating a region’s (Europe) oil Demand it could set global oil prices in general and thus over-ride Supply as the driver of oil price and revenues. It makes one wonder about the qualifications of the current generation of world leaders (led by Biden and the US) playing with the geopolitical world order. And wonder even more about their even less understanding of the consequences of their economic actions on the world economy. *  *  * Jack Rasmus is author of  ’The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump, Clarity Press, January 2020. He blogs at jackrasmus.com and hosts the weekly radio show, Alternative Visions on the Progressive Radio Network on Fridays at 2pm est. His twitter handle is @drjackrasmus. Tyler Durden Wed, 06/29/2022 - 21:00.....»»

The Influencer's Dilemma (Why Elon Musk Is Probably Right About Twitter) Authored by Omid Malekan via Medium.com, The following in an excerpt from my new book: Re-Architecting Trust, The Curse of History and the Crypto Cure for Money, Markets and Platforms. It provides context on the ongoing breakdown of traditional social medial. The prevalence of digital fakery is an underrated contributor to the breakdown of respect in every online setting. It leads to a toxic environment where the worst behaviors are rewarded. To see why, we must first recognize that online influence is valuable. Having a lot of likes, retweets, positive reviews, and followers is an asset, one that increasingly impacts the offline economy. A restaurant that has a lot of five-star reviews is more likely to get new customers and a pundit who has a lot of Twitter subscribers is more likely to get a book deal. The digital attestations of likes and followers and so on are a form of social capital, and everyone is motivated to acquire as much as they can. The question is how. Some people try to acquire their social capital by doing something useful, like running a quality restaurant or putting out valuable content. They hustle, put in long hours, and work to earn every like, retweet, positive review, and follower. This is the social capital equivalent of proof of work: do the work, earn the reward. Other people cheat. They don’t put in the hours or hustle, they instead buy enough fake followers and reviews on the black market to make it look like they did. This is the social capital version of a Sybil attack. On any centralized platform such as Seamless or Twitter, the second group is guaranteed to win. As the comedian Groucho Marx once said, “the secret of life is honesty and fair dealing. If you can fake that, you’ve got it made.” To understand why, recall that the target audience — the consumers who order food from an app, watch TikTok videos, and subscribe to Instagram feeds — have no idea what’s real and what’s fake. Facebook doesn’t tell them what percentage of an Instagram influencer’s likes were generated by a click farm (if it did, advertising revenues would plummet). This lack of information puts every would-be influencer in a bind. If viewers can’t tell the difference between what’s real and what’s fake, then what’s the best strategy for becoming popular? Should they work hard to earn real users or pay up to acquire fake ones? The answer is both. After all, those who decide to both build and buy will always be more popular than those who only do one. In game theory, this is known as the Nash equilibrium. In real life, it’s a race to the bottom. But now we have a new problem because Instagram users aren’t that gullible. They understand that some chicanery is going on. There are too many content creators who are suspiciously popular, and the numbers only ever go up, sometimes too quickly. There are also academic studies and media reports that confirm their suspicions. But there is no obvious tell, so the most reasonable response from the users perspective is to assume that everything is a little fake, and to discount every number — every like, retweet, five-star review, and follower count — accordingly. Since tomorrow will bring more fakery, then discount a little more with each passing day. It helps that the human brain is uniquely adept at performing this invisible calculus. People have been doing it for millennia. Not with social capital of course, but with money. Online social capital in any centralized setting is an inflationary currency. It does not enjoy scarcity of any kind and is easy to counterfeit so its purchasing power falls on a daily basis. That’s why it takes much higher numbers to impress users today than it used to. Here the world’s centralized platform operators are even more irresponsible than central banks. The Federal Reserve might be profligate with its printing, but it at least tries to preserve the integrity of its currency after it’s been issued. That’s why $100 bills are difficult to counterfeit. One hundred (or one hundred thousand) likes on any social media platform, on the other hand, are easy to counterfeit. In economics, Gresham’s Law is the phenomenon by which “bad money eventually drives out good.” It’s more of a principle than a law but explains why lower quality representations of the same currency, like diluted coins with less gold that still have the same face value, tend to force higher quality money out of circulation. It’s best understood from the perspective of ordinary people making sensible decisions. In any economy where legal tender laws force citizens to treat coins of different metal content as having the same value, people are going to try to spend the diluted coins (to get rid of them) and save the denser ones. Maybe the laws will be changed, or the currency will fail, and all coins will have to be melted down to capture their pure metallic value. A similar phenomenon also explains why Bitcoin is increasingly viewed as a store of value, not the medium of exchange it was invented to be. The more fiat money that is printed by the world’s central banks, the greater the perception that fiat is a form of bad money, leading people to want to spend their dollars and hoard their bitcoins. Kabessa’s Law is the social capital equivalent of this dynamic, named after a popular crypto pundit who first postulated the dilemma that every would-be influencer faces in a centralized setting — to build or to buy. This law states that counterfeit online social capital eventually drives out the quality kind, taking over. The higher the percentage of fake activity on any platform, the lower the incentive to bother trying to create the real deal. Put differently, the easier it is to buy one thousand Twitter followers, the lower the incentive to try to earn one. *  *  * About the book: Re-Architecting Trust is a thought-provoking exploration of how decentralized blockchain networks and the digital assets that they enable can reinvent our most important trust frameworks by creating new types of money, reinvigorating how we transact the old kind, disintermediating the least trustworthy financial institutions, and enabling meaningful business models for artists and influencers. You can order a copy here Tyler Durden Wed, 06/29/2022 - 20:20.....»»