Microsoft Surges After AI/Cloud Growth Accelerates; But CapEx Slowed

On the heels of Microsoft's decision to walk away from discussions to lease new server farm space and slow construction on land it already owns, all eyes are on the giant tech company's fiscal third-quarter earnings tonight for any signs of slowing on data center spending plans when it reports Wednesday.

“We believe that the Azure results and guidance as well as Microsoft’s commentary on capex are going to be the keys to the quarter,” wrote Kirk Materne, an analyst at Evercore ISI.

Investors watch these expenses closely for a glimpse of long-term cloud and AI demand expectations from the world’s largest software maker.

So, what's the score?

MSFT beat on EVERYTHING...

Microsoft beat on the top line with Q3 revenues of $70.07 Billion (well above the $68.48 billion consensus) and the bottom line (EPS $3.46 vs $3.22 consensus)

• Microsoft Cloud revenue $42.4 billion, estimate $42.22 billion

• Intelligent Cloud revenue $26.8 billion, estimate $25.99 billion

• Azure and other cloud services revenue Ex-FX +33%, estimate +31%

• Productivity and Business Processes revenue $29.9 billion, estimate $29.65 billion

• More Personal Computing revenue $13.4 billion, estimate $12.67 billion

Cloud revenue surged more than expected with revenues of $42.4 billion (above the $42.22 billion consensus),

“We delivered a strong quarter with Microsoft Cloud revenue of $42.4 billion, up 20% (up 22% in constant currency) year-over-year driven by continued demand for our differentiated offerings,” said Amy Hood, executive vice president and chief financial officer of Microsoft.

Azure & Other Cloud revenue (es-FX) up 35% (better than the 31% consensus).

...AI growth making up 16ppts of that 35% (exp 15.6ppts)...

“Cloud and AI are the essential inputs for every business to expand output, reduce costs, and accelerate growth," said Satya Nadella, chairman and chief executive officer of Microsoft. 

“From AI infra and platforms to apps, we are innovating across the stack to deliver for our customers.”

Operating income was also a solid beat: $32.00 billion, estimate $30.31 billion

But after 10 consecutive quarters of increased spending for artificial intelligence, the company has put on the brakes.

While top-line capital expenditure was $16.75 billion vs. $10.95 billion y/y (above the $16.28 billion consensus)

But, in the first three months of 2025, Microsoft spent $21.4 billion on Capital expenditures including assets acquired under finance leases, down more than $1 billion from the previous quarter (and below the $22.56 billion consensus).

The company is still on track to spend more than $80 billion on capital expenses in the current fiscal year, which ends in June. But, as The NY Times notes, the pullback, though slight, is an indication that the tech industry’s appetite for spending on A.I. is not limitless.

As a result of all this, MSFT shares are soaring after hours...

...and we can't help but wonder if someone 'knew' about this 'early' given the moves in the market in the last minutes before the bell.

All eyes now on the call for any signals of a reduction in CapEx (expected at $88 billion for the fiscal year ending in June and $100 billion for the following fiscal year).

Tyler Durden Wed, 04/30/2025 - 16:18

Sour Patch Kids, Oreos, Ritz Demand Slides Across North America, Says Mondelez

A slowdown in economic activity, combined with growing tariff uncertainty, appears to be curbing consumer appetite for highly processed junk food. The latest trends show a declining demand for sweet snacks in North America as more shoppers shift their spending toward real food, such as meat, vegetables, and eggs. 

Mondelez International — the maker of Sour Patch Kids, Oreos, Ritz, Toblerone, Cadbury, and other highly processed food brands — reported slower-than-expected sales for the first quarter.

Organic revenue, which excludes currency fluctuations and one-time items, increased 3.1%, falling short of the Bloomberg consensus estimate of 3.5%. Notably, sales in North America declined during the quarter. 

On an earnings call, Mondelez CEO Dirk Van de Put told analysts: "I really do not expect to see a significant improvement in consumer confidence in the near term in the US." 

"Two, three years ago consumers would easily pay above $4 for a pack of biscuits," Van de Put said adding, "We're now seeing that we need to be below $4 and ideally below $3."

Mondelez noted that shoppers are beginning to prioritize real food — if that's meat, vegetables, and eggs — over snacks, chips, and candy. Also, lower-income consumers are pivoting towards smaller packages, while higher-income consumers are searching for larger value bundles. 

Mondelez reiterated its full-year guidance and warned profit will slide 10% this year "due to unprecedented cocoa cost inflation."

Weighing in on the North American junk food slowdown, Goldman analysts Leah Jordan and Eli Thompson offered clients their first take on Mondelez's first-quarter results and its unchanged full-year outlook:

1. North America came in softer-than-expected on the back of retailer destocking and softer cracker demand as the consumer remains value-focused;

2. chocolate elasticity tracked in-line with expectations, although more pricing is still to come; and

3. MDLZ reiterated its FY25 guide in constant currency while potential upside is likely to be reinvested throughout the year to support potential growth in FY26

The key takeaway for the North American market:

• North America softer-than-expected: Organic net sales in North America came in softer-than-expected at -3.6% (vs GS/consensus of flat/+0.1%), largely due to retailer destocking (-250 bps), while segment profitability also missed. The destocking impact should be one time in nature, but we do not expect it to reverse as we have heard from retailers that this effort has been driven by efficiency gains. Additionally, MDLZ noted softer demand for crackers (vs cookies), although both categories are holding up relatively better than other parts of snacking, plus the company is holding share due to investments in price pack architecture and key activations. Additionally, management spoke to increasing promotional activity by peers in crackers, and we see greater private label competition in the category as well. Regarding consumer behavior, the company noted a shift to smaller pack sizes by the lower end and toward multi-packs for upper income cohorts, along with a shift in channels toward dollar stores, clubs, and value retailers.

Details about the cocoa market:

• Chocolate elasticity tracking in-line, although more pricing still to come: MDLZ indicated elasticity within chocolate tracked in-line with expectations at -0.5%, while it gained share in the category. However, more pricing will be implemented in the spring with management taking a wait and see approach while expressing confidence in its chocolate strategy with a range of price points. The company expects a top line acceleration throughout the year, supported by both pricing and volumes, with Easter strength noted for 2Q and pricing negotiations are now complete in Europe (vs a disruption last year). By region, management highlighted solid Easter chocolate demand for Europe/UK, Brazil, and Australia, with stable YTD elasticities noted for Europe and Emerging Markets. Notably, MDLZ indicated greater elasticity for chocolate in the U.S. vs ROW with volumes tracking down -5%, which is a negative read-through for HSY.

Notes on guidance:

• Reiterated FY25 guide with potential upside expected to be reinvested: MDLZ reiterated its FY25 guidance with an adj EPS decline of -10% (constant currency), noting potential upside would likely be reinvested (e.g., 1Q beat planned to be reinvested in marketing this year), while the tariff impact remains small. FY25 organic sales guidance was also reiterated at +5%, with sequential improvements supported by both volume and pricing. We also expect a gross margin improvement throughout the year tied to its pricing action. Regarding FY26, MDLZ expects EPS growth y/y, but management stopped short on the magnitude of potential ranges given cocoa uncertainty. For cocoa, the company still sees a supply/demand surplus with further demand destruction likely (as some will likely reformulate). Furthermore, the company sounded constructive on its position given lower cocoa butter prices y/y, its bigger input exposure.

Despite key downside risks, such as an economic slowdown, Goldman analysts remained "Buy" rated on Mondelez, with a 12-month price target of $71. 

Mondelez did not indicate that the slowdown in junk food demand was influenced by the "Make America Healthy Again" movement in any way (well at least not yet). 

Tyler Durden Wed, 04/30/2025 - 14:25

Waste Of The Day: Houston Superintendent Gets Bonus After "D" Grade

Authored by Jeremy Portnoy via RealClearInvestigations,

Topline: The Houston Independent School District is facing a budget deficit that at one point reached $250 million, but that did not stop Superintendent Mike Miles from accepting a $126,730 bonus in April to supplement his $380,000 salary.

Key facts: Miles’ bonus was calculated after he received a 66.7 out of 100 on his first annual evaluation from the school board that measured student performance, “executive leadership” and “vision,” according to the Houston Chronicle. A perfect score would have netted Miles a $190,000 bonus.

The school district has struggled with funding for years, as have other large school districts in Texas. The state government has not increased public school funding since 2019 to keep pace with inflation, and yet some of Houston’s struggles come simply from overspending. Cumulative inflation from 2019 to 2024 in the U.S. was 22%, but Houston ISD increased its payroll by 29% in that timespan, according to OpenTheBooks’ database. 

Last year the school released an audit detailing “overtime abuse” that forced the district to pay $26 million in one year. Auditors also found an “overreliance on purchased services” and “overuse of consultants with several other costs to overall effectiveness.”

The district began the current school year with a $125 million deficit, but Miles asked the school board to approve an amendment that increased spending and ballooned the deficit to $250 million, forcing the district to dig into its reserves and one-time savings.

Next year the district projects a $33 million deficit after laying off 1,500 employees. Miles is also considering closing some school buildings to cut costs.

Search all federal, state and local government salaries and vendor spending with the AI search bot, Benjamin, at OpenTheBooks.com. 

Supporting quote: Miles told the school’s community advisory committee, “I assure you, that bonus and incentive was well deserved, and I know my value, and achievement results show that.”

Critical quote: The Houston Chronicle’s editorial board equated Miles’ 66.7 evaluation score to a “D,” claiming that “It’s a lousy grade. The kind you bury at the bottom of your backpack in hopes it disappears before somebody sees. That's essentially what the district tried to do. Chronicle reporters had to file a public information request to get a copy of the evaluation.”

Summary: Houston is far from the only school district giving its superintendent a generous bonus, but a fiscal crisis — and a “D” grade — is not the time to do it. 

The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com

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Tyler Durden Wed, 04/30/2025 - 14:05

Sen. Josh Hawley Introduces PELOSI Act To Stop Insider-Trading

Via American Greatness,

Senator Josh Hawley (R-MO) has reintroduced the “Preventing Elected Leaders from Owning Securities and Investments” (PELOSI) Act that would prohibit members of Congress and their families from trading stocks while in office.

The name of the act is a direct nod in the direction of 20 term Congresswoman Nancy Pelosi (D-CA) whose net worth has soared from $160,000 when she was first elected in 1987 to more than $140 million in 2024.

The bill to ban congressional stock trading is entitled the PELOSI Act, or "Preventing Elected Leaders from Owning Securities and Investments."

I usually don't like cute names for pieces of legislation, but this one hit the nail on the head. Bravo.

Pass it!! pic.twitter.com/pN8nicKJRx

— Charlie Kirk (@charliekirk11) April 29, 2025

Pelosi’s husband Paul, who narrowly survived a hammer attack 2022, is an investor who has made significant financial gains on stock trades that some speculate may have been based on insider information.

Hawley first introduced the PELOSI Act in 2023 but it failed to gain traction under the Biden administration.

Since then, the proposal has gained support on both sides of the congressional aisle and Fox News reports that President Trump has said he would “absolutely” sign the ban if it arrives on his desk.

Hawley has been a consistent critic of members of Congress being more focused on day-trading than they are on representing their constituents.

In a statement, Hawley said, “Americans have seen politician after politician turn a profit using information not available to the general public. It’s time we ban all members of Congress from trading and holding stocks and restore Americans’ trust in our nation’s legislative body.”

The PELOSI Act would prohibit lawmakers and their spouses from purchasing, selling or holding stocks during the time that the lawmaker is in office.

Lawmakers would still be able to invest in U.S. Treasury Bonds, diversified mutual funds or exchange-traded funds while in office.

Should the PELOSI Act be signed into law, current members of Congress would have 180 days to comply with newly elected members being required to comply with in 180 days of entering office.

Lawmakers who violate the act would be required to hand over their profits to the U.S. Treasury Department and could also face fines of up to 10% on each transaction.

Tyler Durden Wed, 04/30/2025 - 13:25

Oil Plunges On Report Saudis Bracing For Price War, Can "Live With Lower Oil Prices"

It had already been a miserable month for oil, which has suffered its worst monthly performance since 2021 and also is on pace for its month of April on record... and then it got even worse when shortly before noon ET, when Reuters reported, citing multiple sources, that Saudi Arabian officials are briefing allies and industry experts to say the kingdom is unwilling to prop up the oil market with further supply cuts and can handle a prolonged period of low prices.

This shift in Saudi policy could suggest a move toward producing more and expanding its market share, a major change after five years spent balancing the market through deep output as a leader of the OPEC+ group of oil producers. Those cuts had supported prices, in turn bolstering the oil export revenue that many oil producers rely on, but many OPEC+ members - most notably Kazakhstan - took advantage of the production restraint and blew away through their export quotas, infuriating other cartel members.

Sure enough, Reuters notes that Riyadh has been angered by Kazakhstan and Iraq producing above their OPEC+ targets. And after pushing members to adhere to those targets and to compensate for oversupply in recent months, a frustrated Riyadh is changing tack, OPEC+ sources said.

Saudi Arabia pushed for a larger-than-planned OPEC+ output hike in May, a decision that helped send oil prices below $60 a barrel to a 4-year low.

And now that Kazahkstan blew it for all cartel members, everyone will share the pain equally, as lower prices are bad news for producers that rely on oil exports to fund their economies. Although producers like Saudi have a very low cost of production, they need higher oil prices to pay for government spending. When oil prices fall, many large oil-producing countries come under pressure to cut their budgets.

And just to confirm that they are not bluffing, the Saudis appear to be briefing allies and experts that they are ready to do just that. The last time they did just that was in March 2020, just before covid shut down the global economy and briefly sent oil prices negative, sparking budget crises across all OPEC members.

Saudi officials in recent weeks have told allies and market participants the kingdom can live with the fall in prices by raising borrowing and cutting costs, the five sources said.

"The Saudis are ready for lower prices and may need to pull back on some major projects," one of the sources said. All sources declined to be named due to sensitivity of the issue.

The problem is that Saudi Arabia needs oil prices above $90 to balance its budget, higher than other large OPEC producers such as the United Arab Emirates, according to the International Monetary Fund (IMF). As a result, Riyadh may need to delay or cut back some projects due to the price drop, analysts have said.

OPEC+, which besides the Organization of the Petroleum Exporting Countries also includes allies such as Russia, may decide to speed up output hikes again in June, OPEC+ sources have said. OPEC+ is cutting output by over 5 million barrels or 5% of global supply, to which Saudi Arabia is contributing two-fifths.

Russia, the second largest exporter in OPEC+ behind Saudi Arabia, is aware of Riyadh's plans for faster output increases, said two of the five sources who are familiar with the Russian thinking and conversations with Riyadh. Even so, Russia would prefer the group stick to slower output increases.

Saudi Arabia and Russia, the de facto leaders of OPEC+, make the biggest contributions to OPEC+ cuts. Russia's budget balances at about $70 a barrel and the Kremlin's spending is on the rise due to the Russian war in Ukraine.
Russia may see a further fall in revenue as prices for its discounted, sanctioned oil could fall below $50 a barrel as a result of OPEC+ output rises, one of the two sources said.

Theories on the apparent change in Saudi strategy range from punishing OPEC+ members exceeding their quotas to a move to fight for market share after ceding ground to non-OPEC+ producers such as the United States and Guyana. Higher output may also be a fillip to U.S. President Donald Trump, who has called for OPEC to boost output to help keep U.S. gasoline prices down.

Trump is due to visit Saudi Arabia in May and could offer Riyadh an arms package and a nuclear agreement. OPEC+ decided to triple its planned output increase to 411,000 bpd.

That still leaves OPEC+ holding back more than 5 million bpd, curbs the group aims to unwind by the end of 2026. 

"We would still call this a 'managed' unwind of cuts and not a fight for market share," UBS analyst Giovanni Staunovo said.

“This confirms the market’s fears that Saudi Arabia’s accelerated unwinds were not temporary, but a long-term strategy shift,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. It raises the question of whether “Saudi is going to repeat the 2020 playbook to dramatically increase production.”

For now the market is voting "yes", and the news sent WTI tumbling as much as 4%,or more than $2 to just under $58, the lowest price since early 2021 (and a level which was only briefly breached after Trump's Liberation Day sent oil to $55 before rebounding rapidly).

OPEC+ rocked the crude market in early April, with a surprise decision to increase supply in May by 411,000 barrels a day, the equivalent of three monthly tranches from a previous plan. Morgan Stanley has said it expects a “meaningful surplus” to develop over time, while JPMorgan Chase & Co. warned the cartel may accelerate planned production increases at a meeting next week.

Beyond OPEC+, non-cartel nations are also expected to add supplies, including drillers in Canada and Guyana, feeding concerns about a global glut.

At the same time, hopes are fading that there will be quick breakthroughs in US-led trade negotiations, weighing on the outlook for energy demand. The US economy contracted for the first time since 2022 in the first quarter as a result of a surge in pre-tariff imports and softer consumer spending. In China, factory activity slipped into the worst contraction since December 2023, revealing early damage from the trade war.

Tyler Durden Wed, 04/30/2025 - 13:08

Appeals Court Upholds Restrictions On Deportations Of Venezuelans From US

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

A federal appeals court on April 29 turned down the Trump administration’s bid to block restrictions on deporting Venezuelans from Colorado.

Venezuelan illegal immigrants deported from the United States disembark from a Conviasa Airlines plane upon arrival at Simon Bolivar International Airport in Maiquetia, Venezuela, on March 24, 2025. Juan Barreto/AFP via Getty Images

The government did not show that it is likely to be irreparably harmed if a lower court order remains in place, a unanimous three-judge panel of the U.S. Court of Appeals for the 10th Circuit ruled.

Under court precedent, a party seeking a stay pending appeal must show it will likely be irreparably harmed absent a stay.

U.S. District Judge Charlotte N. Sweeney recently issued a temporary restraining order requiring the Trump administration to give Venezuelans arrested for alleged links to the Tren de Aragua gang three weeks’ notice before deportation.

The order applies to all noncitizens in Colorado who were, are, or will be subject to President Donald Trump’s March invocation of the Alien Enemies Act. The president at the time said that Tren de Aragua had invaded the United States, and he directed officials to arrest and deport its members.

“All members of the class are in federal custody. And given the important unresolved issues under the Alien Enemies Act (AEA) and the ruling of the United States Supreme Court that no one in that proceeding be removed under the AEA until further order of that Court ... there is no realistic possibility that the government could remove any member of the class from this country before final expiration of the TRO on May 6, 2025,” the 10th Circuit panel stated.

Lawyers for the government and the plaintiffs in the case did not respond to early morning requests for comment.

Four factors must be met to secure a stay pending appeal. The appeals court did not address the other three factors, which include presenting a strong showing that a party is likely to succeed in the case since the irreparable harm standard was not met, the judges said.

The panel consisted of U.S. Circuit Judges Harris L. Hartz, Gregory A. Phillips, and Joel M. Carson.

Government lawyers had said in filings that Sweeney lacked jurisdiction to halt deportations because the plaintiffs were not in custody at the time of the ruling. Immigration and Customs Enforcement had released the plaintiffs because it determined they were not subject to the Alien Enemies Act.

The lawyers also argued that the restraining order “irreparably harms the United States’ conduct of foreign policy” because it “usurps the President’s statutory and constitutional authority to address what he has identified as an invasion or predatory incursion.”

Attorneys representing the Venezuelans had said in response that the restraining order was proper because the government had been giving people arrested under the invocation just 24 hours’ notice of removal, which they said did not achieve due process.

Tyler Durden Wed, 04/30/2025 - 13:05

The Spanish Power Outage: A Catastrophe Created By Political Design & A Warning To The World

Authored by Daniel Lacalle,

On April 23rd, I participated in a conference at the European Parliament on the future of nuclear energy with experts from all over Europe, where I warned that, with the current energy policies, blackouts will be the norm, not a coincidence.

The shortsighted and sectarian policy of the activists who populate the government has led us to the worst blackout in the history of Spain. We have been without communication or electricity for nearly eleven hours.

This blackout, with the immediate collapse of fifteen gigawatts of power in the system, is the consequence of a policy that penalizes base energy, key to providing stability to the system, and plunders the energy sector.

Governments have been dedicated to closing nuclear power plants, making them unviable with abusive and confiscatory taxation; penalizing investment in distribution with absurd regulations; imposing a volatile and intermittent energy mix; and burdening energy with elevated taxes and administrative delays. What could go wrong? Everything.

And it happened.

Renewable energies, while essential in a balanced energy mix, cannot provide safety and stability due to their volatility and intermittent nature. That’s why it is essential to have a balanced system with base-load energy that operates all the time, such as hydropower, nuclear, and natural gas as backup.

Destroying access to nuclear energy with unnecessary closures and confiscatory taxation has been part of the fundamental causes of the disaster and the blackout.

Last week, they had to close the remaining nuclear power plants because their taxes are so high that they cannot cover their fixed costs. They have destroyed nuclear plants’ economics by political design. Moreover, those plants would have provided stability to the grid if national and regional governments, which use nuclear and hydroelectric power as cash cows for their revenue-hungry policies, had prioritized supply security over energy sectarianism.

There is much more.

Spain and Portugal produce electricity with more than 60% solar and wind energy. Hydraulic, nuclear, and combined cycle gas plants must cover the shortfalls in solar and wind production, which is intermittent. There is no possibility of having a stable and secure system with a continuous supply if the electrical grid is not balanced to avoid a total blackout.
According to Euronews, France sometimes produces too much electricity, leading the network operator RTE to disconnect solar or wind sites. The consumer pays taxes to cover the operator’s losses. This procedure prevents a general blackout of the grid.”

In Spain, the president of Red Eléctrica, Beatriz Corredor, whose experience in energy is more than scarce, has never given a message or coordinated actions to prevent blackouts that were happening more frequently recently. We have been experiencing sporadic supply cuts to the industry for years, and just a week ago, the Chamartín station had a severe supply cut episode.

The crisis was not only a disaster due to the shortsighted energy policy of the current and previous governments. It was a disaster due to the inaction of the Ministry of Defence. Similar to the recent floods, our security forces exhibited astonishment at their lack of mobilization. Trains and elevators blocked thousands of travelers for hours, while the army stood by, waiting for orders.

Six days ago, the government, left-wing parties, and many media outlets celebrated that Spain’s power grid ran entirely on renewable energy for a weekday for the first time. Bravo. A week later, a massive blackout in Spain, Portugal, and parts of France. France quickly restored electricity because it has the largest nuclear fleet in Europe. In Spain, the government maintained a confiscatory taxation system that prevented nuclear plants from operating, resulting in nearly eleven hours of darkness and no communication.

Red Eléctrica reported that the cause was a “strong oscillation in the electrical grid” that “forced the Iberian Peninsula to disconnect from the European system”. The collapse was immediate and long-lasting. It was the longest power outage in the history of Spain. The recovery efforts were in vain as they attempted to restore frequency control and stability with a system dependent on volatile and intermittent renewables.

A system without physical inertia, provided by baseload energies that operate all the time—nuclear and hydroelectric—makes it impossible to stabilise the grid in the face of supply disruptions.

When the collapse occurred, the Spanish electrical grid had almost 80% renewable generation, 11% nuclear, and only 3% natural gas. There was practically no base generation or physical inertia to absorb the shock that was generated.

For years, experts have issued warnings. Experts from around the world have been accused of being mouthpieces for invented lobbies when they warned of the risk to the system from overloading with renewables and eliminating or limiting base-load energies. In 2017, the European Network of Transmission System Operators warned that the increase in renewables would raise the risk of cascading failures if urgent investment was not made in synthetic inertia and storage technologies. Moreover, even if investment is made in storage, hundreds of experts warned about the additional burden with the electrification of the mobile fleet. Despite the warnings from energy companies and operators, the European Commission maintained its bet on renewable development that was poorly planned and worse executed. This included a New Green Deal that ignored the importance of networks and backup and seemed designed by school activists.

The Spanish government wanted to present itself as the top student of that so-called ecological sectarianism, which ignores copper and lithium mining, the importance of backup, and system stability. What have they achieved? They have created a disaster that has the potential to repeat itself.

Blackouts, which should have been something obsolete and forgotten, have become the norm since politicians have ideologised energy. Other countries have suffered similar problems: Australia (2016), Germany (2017), and the United Kingdom (2019) experienced blackouts or near-blackouts due to insufficient energy reserves or grid stability measures. However, none of these incidents have been as dramatic or scandalous as the one in Spain.

The governments of Spain have decided that the closure of all our nuclear power plants will be effective in 2035, despite all the technicians reminding us that they work perfectly and their lifespan could be extended by at least ten years. This action is going to increase dependence on renewables and Russian natural gas. In other words, Spain’s shortsighted policy is going to make the country more dependent on China and Russia for energy and face constant blackouts and supply cuts to the industry as if it were a third-world dictatorship.

Propaganda told us that renewables would bring competitiveness and stability to the grid, but the reality shows that an over-reliance on certain renewables and a shortage of base-load energy sources indicate that the electrical grid increasingly depends on the few nuclear and natural gas plants that operate to maintain supply stability.

The blackout in Spain was not caused by a cyberattack but by the worst possible attack, that of politicians against their citizens.

It is urgent that Spain radically changes its energy strategy, that we maintain and expand the nuclear and base energy park, or we will depend more on Russia and China and, moreover, with blackouts.

Tyler Durden Wed, 04/30/2025 - 11:45

The Gold Rush You Weren't Supposed To Notice & The Next Big Monetary Reset

Authored by Nick Giambruno via InternationalMan.com,

Last year, central banks purchased approximately 34 million ounces of gold, marking the third consecutive year of near-record buying.

We’re witnessing the acceleration of a long-term trend that began around the 2008 financial crisis, when central banks shifted from net sellers to net buyers of gold. That trend has exploded in recent years, with gold purchases surging to record-breaking levels, as shown in the chart below.

All signs indicate that 2025 will be another massive year for central bank gold buying.

Central banks and governments are the largest single holders of gold in the world. Together, they officially own over 1.2 billion troy ounces—out of the 6.9 billion ounces humans have mined throughout history.

However, these are just the official numbers that governments report. The actual gold holdings could be much higher, as governments tend to be secretive about their reserves, treating gold as a strategic financial asset.

Russia and China—the US’s top geopolitical rivals—have been the biggest gold buyers over the last two decades.

It’s no secret that China has been stashing away as much gold as possible for many years.

China is the world’s largest producer and buyer of gold. Russia is number two. Most of that gold enters the Chinese and Russian government’s vaults.

The trend of central bank gold accumulation is gaining momentum. If the rest of the world is moving back toward gold, the US will not want to be left behind.

Yet, officially, the US has not added a single ounce to its 261 million ounces of gold reserves in decades.

Unofficially? That may be a different story.

Since Trump’s victory in the 2024 presidential election last November, a sudden flood of physical gold has flowed into the US from major gold hubs like London, Switzerland, and elsewhere.

The gold market is typically dominated by paper trading, with large-scale physical deliveries being rare. However, CNBC and the World Gold Council report that more than 19 million ounces—possibly much more—of physical gold has entered the US since November.

That’s roughly 13% of the total alleged gold holdings in Fort Knox flowing into the US in less than six months.

This is not normal market action.

This strongly suggests that a non-market entity—most likely the US government—is behind this massive gold movement.

That’s why Trump’s recent comments about Fort Knox are so interesting.

Trump recently brought Fort Knox into the national conversation, something no US president has done in decades.

Would he have even mentioned the possibility of auditing Fort Knox if the vaults were empty? I doubt it.

Instead, there’s a good chance that the enormous inflow of physical gold into the US is happening in anticipation of an audit.

Connecting the Dots—Something Big Is Coming

So, here’s what we know:

1. Trump has put Fort Knox’s gold holdings back in the national spotlight for the first time in decades.

2. Central bank gold purchases are accelerating at record-breaking levels.

3. An unusually large influx of physical gold is flowing into the US, far beyond regular market activity.

Follow the Gold. It Always Leads to the Truth

Central banks are hoarding gold at record levels. The US government is likely pulling in millions of ounces. And Trump is talking about Fort Knox.

This isn’t coincidence.

Find out what they’re preparing for and how you can be ready in our urgent dispatch:

The Most Dangerous Economic Crisis in 100 Years… the Top 3 Strategies You Need Right Now

Click here see it now.

Tyler Durden Wed, 04/30/2025 - 11:05

Stagflation Scenario Slammed As Fed's Favorite Inflation Indicator Tumbles To Four Year Lows

The Fed's favorite inflation indicator - Core PCE - printed cooler than expected in March, unchanged MoM (vs +0.1% exp), bring prices up 2.6% YoY - the lowest since March 2021...

Source: Bloomberg

...with non-durable goods deflating MoM the biggest drag on Core PCE

...but, but, but we were told tariffs would spark hyper-super-scary-inflation?

The headline PCE was -0.045% MoM - the biggest MoM drop since COVID lockdowns...

...dragging headline PCE YoY down to +2.3%...

SuperCore PCE also saw the YoY pace slow significantly...

Spending outpaced incomes significantly in March...

Source: Bloomberg

Which means that the savings rate fell to 3.9% from 4.1% in February, which was revised lower from 4.6%...

Adjusted for inflation, real personal spending surged 0.7% MoM (not a total surprise given that 'consumers' are panicking over an imminent surge in inflation, of course they should be spending)....

It appears DOGE is doing its jobs too - crushing govt wage growth

• March Government worker wages and salaries up just 2.9%, down from 3.2% in Feb and the lowest since Sept 2020

• March Private worker wages and salaries up 5.4%, down from 5.7%, and lowest since Dec 2022

...and there goes the stagflation scenario.

Tyler Durden Wed, 04/30/2025 - 10:16

Judge Bars Border Patrol From Making Warrantless Arrests Of Illegal Immigrants In Parts Of California

Authored by Tom Ozimek via The Epoch Times (emphasis ours),

A federal judge in California has barred U.S. Border Patrol agents from arresting suspected illegal immigrants within parts of the state without a warrant or specific evidence that the individual poses a flight risk—while delivering a rebuke to tactics used during a controversial January enforcement sweep.

Border Patrol agents wait for the arrival of Defense Secretary Pete Hegseth for a visit to the US-Mexico border in Sunland Park, New Mexico, on Feb. 3, 2025. AP Photo/Andres Leighton, File

In an April 29 order, U.S. District Judge Jennifer L. Thurston issued a preliminary injunction against the Department of Homeland Security (DHS) and Border Patrol, siding with the United Farm Workers and five Kern County residents who sued after the raid, dubbed “Operation Return to Sender,” unfolded across the Bakersfield area earlier this year.

The plaintiffs, represented by the American Civil Liberties Union (ACLU), alleged in their Feb. 26 complaint that the sweep violated their Fourth and Fifth Amendment rights, along with federal immigration statutes governing warrantless arrests and due process.

Under Thurston’s order, Border Patrol agents operating in California’s Eastern District are now prohibited from making detentions or arrests without first establishing reasonable suspicion of unlawful presence in the country and, for arrests, probable cause that the individual is likely to flee before a warrant can be obtained.

“The evidence before the Court is that Border Patrol agents under DHS authority engaged in conduct that violated well-established constitutional rights,” Thurston wrote in the ruling.

The court also restricted the agency’s use of “voluntary departure,” a process by which illegal immigrants agree to leave the United States without a hearing before an immigration judge. Going forward, agents must clearly inform individuals of their rights and obtain genuine, informed consent before initiating such removals.

The judge further ordered DHS to submit regular reports documenting any warrantless stops or arrests, along with justifications, for the duration of litigation. She also instructed DHS to issue written guidelines clarifying the legal threshold for initiating stops.

“This guidance shall include, among other things, that refusal to answer questions does not, without more, constitute a basis for reasonable suspicion to justify a detentive stop,” she wrote.

The case stems from allegations that, beginning in early January 2025, dozens of Border Patrol agents traveled more than 300 miles inland from the U.S.–Mexico border to Bakersfield, targeting predominantly Latino neighborhoods and day laborer gathering spots without individualized suspicion.

The plaintiffs described “Operation Return to Sender” as a sweeping dragnet based on racial and occupational profiling, claiming agents pulled over vehicles, blocked parked cars, conducted warrantless searches, and detained people without evidence of unlawful presence.

Once in custody, detainees were allegedly transported to a facility near the border, denied access to attorneys, and pressured into signing “voluntary departure” forms without understanding the consequences—a process plaintiffs described as “summary expulsion” that can carry long-term reentry bans.

Once in custody, detainees claimed they were transported to a Border Patrol facility near the border, where they were denied access to lawyers and coerced into signing “voluntary departure” forms under misleading pretenses, which they described as a “form of summary expulsion.”

Attorneys for the Justice Department argued the case should be dismissed, claiming the plaintiffs lacked standing and that no official policy mandated unlawful stops or arrests. They further contended that any potential violations were isolated incidents, not part of a broader pattern, and that the lawsuit had become moot after DHS issued revised internal guidance.

But the court rejected those arguments, finding that the plaintiffs demonstrated a credible threat of repeated harm. Thurston wrote that the new DHS policy did not eliminate the risk of future violations and “could be withdrawn or altered in the future” without constraint.

The Epoch Times contacted the Justice Department and the ACLU with requests for comment on the ruling.

Tyler Durden Wed, 04/30/2025 - 09:40

"Nothing To Do With Tariffs" - Trump Blames Biden "Overhang" As Stocks Puke After Q1 GDP

US equity futures are tumbling in the pre-market following a weak ADP employment report and Q1 GDP contraction (driven by a tariff-front-running surge in imports).

In the last month or two, we have been told that President Trump is not focused on the stock market, rejecting the idea of a 'Trump Put' (especially when it came to the decision to 'pause' reciprocal tariffs this month).

However this morning, following the bad data and ugly equity drop, Trump posted on TruthSocial that "This is Biden’s Stock Market, not Trump’s."

I didn’t take over until January 20th. 

Tariffs will soon start kicking in, and companies are starting to move into the USA in record numbers. 

Our Country will boom, but we have to get rid of the Biden “Overhang.” 

This will take a while, has NOTHING TO DO WITH TARIFFS, only that he left us with bad numbers, but when the boom begins, it will be like no other.

BE PATIENT!!!

The surge in imports - which dragged down GDP - is due to the tariff decisions, there is no question.

But also bear in mind that this is not a 'classic recessionary slowdown' in the economy, it is a front-running surge in imports 'ahead' of the tariffs and shrinking government spending.

The former is a temporary impact, the latter is what America voted for!!

Interestingly, rate-cut odds are rising notably after the data...

Which makes us wonder if 'the market' is now switching to search for the 'Fed Put', not the 'Trump Put'.

 

Tyler Durden Wed, 04/30/2025 - 09:28

US Q1 GDP Contracts On Record Imports, Shrinking Govt, As Consumption Comes In Stronger Than Expected

There were good and bad news in today's GDP report.

Starting with the bad news, Q1 GDP printed -0.3%, worse than the -0.2% expected and the first negative print since Q1 2022 when the economy was in a recession but was subsequently revised out of it

The good news is that the drop was actually supposed to be much worse (recall the Atlanta Fed's latest GDP estimate was -2.7%, or -1.5% excluding record gold imports). Indeed, if one looks at the components of today's GDP print one finds that the number was actually unexpectedly strong, if one strips out the two negative components, net trade and government.

As shown in the chart below, Q1 GDP comprised of the following components:

• Personal Consumption 1.21%, down from 2.70%, but translating into an annualized Personal Consumption print of 1.8%, much higher than the 1.2% expected
• Fixed investment jumped to 1.34%, up from -0.2% and the highest since Q2 2023 as the BEA finally starts tracking data center investment correctly
• Change in private inventories surged 2.25%, as expected, on the pre-tariff restocking; this number was up from a -0.84% drop last quarter and is expected to reverse in coming quarters as inventories are sold off.
• Government spending was a negative -0.25%, the first negative print for Joe Biden's favorite "plug" to push GDP higher since 2022.
• Finally, and most importantly, net trade (exports less imports) was a whopping 4.830% hit to the final GDP number, a 5% swing from the +0.26% contribution in Q4. This was entirely the result of soaring imports (of which gold was about half) in Q1 which hit GDP by a near record 5.03%. Just like inventories, this number will now reverse in coming quarters as tariff frontrunning ends and is reversed.

And visually:

Taking a closer look at the import contribution to GDP, which was the biggest swing factor, one can see that at 5.03%, this was the 2nd highest on record with just the outlier covid shock bigger. In other words, absent economic shock, this was a record quarterly print.

In its commentary, the BEA confirmed as much, writing that "the decrease in real GDP in the first quarter primarily reflected an increase in imports, which are a subtraction in the calculation of GDP, and a decrease in government spending. These movements were partly offset by increases in investment, consumer spending, and exports."

Compared to the fourth quarter, the downturn in real GDP in the first quarter reflected an upturn in imports, a deceleration in consumer spending, and a downturn in government spending that were partly offset by upturns in investment and exports.

Turning to inflation, the BEA reported that the price index for gross domestic purchases increased 3.4 percent in the first quarter, compared with an increase of 2.2 percent in the fourth quarter. The personal consumption expenditures (PCE) price index increased 3.6 percent, compared with an increase of 2.4 percent. Excluding food and energy prices, the PCE price index increased 3.5 percent, compared with an increase of 2.6 percent.

Putting these in context, GDP Price index of 3.7% came in hotter than the 3.1% expected, while the core PCE of 3.5% was also hotter than the 3.1%.

Bottom line, the GDP number was much stronger than expected, in fact it was a whopping 2.4% higher than the now laughable AtlantaFed GDP forecast, and if anything this positions the Trump admin for a surprise bounce in Q2 and/or Q3 when all the outlier prints from Q1 are reversed.

Tyler Durden Wed, 04/30/2025 - 09:04

Rate-Cut Odds Jump After ADP Reports Weakest Job Growth Since July 2024

While jobless claims refuse to show even a glimmer of hope to the doomsaying 'recession is imminent and it's all because of Trump' narrative, this morning's ADP gives us a potential glimpse at what Friday's 'most important payrolls print ever' will offer.

...and the picture is not pretty at all...

According to ADP, the US economy added just 62k jobs in April - the lowest since July 2024's dip

Source: Bloomberg

Education and health services, information, and professional and business services lost jobs, while hiring in other sectors was moderate.

"Unease is the word of the day," says Nela Richardson Chief Economist.

"ADP Employers are trying to reconcile policy and consumer uncertainty with a run of mostly positive economic data. It can be difficult to make hiring decisions in such an environment."

Goods-Producing jobs outperformed Service-Providing jobs...

There is more bad news -

Pay for job-stayers rose 4.5 percent in April from a year earlier, a slight deceleration from March. 

Year-over-year pay gains for job-changers accelerated, rising from 6.7 percent in March to 6.9 percent in April - the highest since Dec 2024.

The question is - will this dreadful jobs print prompt The Fed to come back to the table (or is the wage re-acceleration enough to keep them away)?

The market is moving that way - pricing in four cuts for 2025 now.

Tyler Durden Wed, 04/30/2025 - 08:24

Futures Drop Ahead Of Macro Data, Earnings Deluge

US equity futures slipped ahead of key GDP and PCE data. As of 8:00am, S&P 500 futures are down 0.3% while Nasdaq 100 contracts lose 0.5%, with Mag 7 names mostly lower (NVDA -1.4%, TSLA -1.1% and META -0.6%) as weak earnings weighed on risk sentiment after Super Micro plunged 16% ahead of Microsoft and Meta numbers later on Wednesday. Bond yields are lower by 1bps to 4.15% while the USD is higher. Overnight, China’s factory PMI slipped into the worst contraction since December 2023 (49 vs 49.7 cons) due to the negative impact of higher US tariffs, while Trump at a rally in Michigan renewed his criticism of Powell, noting he is "not really doing a good job" and that he knows more about interest rates. This morning, Euro Area flash CPI has been mixed, while Q1 GDP data was slightly firmer than expected at 1.2% YoY (vs 1.1% cons). Commodities are mixed: oil is 1.8% lower; previous metals are lower, while base metals are mostly higher. After yesterday’s close, earnings were modestly negative. Particularly, SBUX fell 6.7% on missed earnings amid margin pressure and top-line growth. BKNG commented that there is a moderation in inbound travel into the US, but so far the global leisure travel demand has been stable. Looking ahead today, we have ADP employment, Q1 GDP, PCE and employment cost index. There are no Fed speakers scheduled given blackout ahead of May's FOMC meeting.

In premarket trading the Mag7 stocks were mostly lower (Alphabet -0.1%, Amazon -0.6%, Apple -0.4%, Meta Platforms -0.9%, Microsoft +0.1%, Nvidia -2%, Tesla -1.3%). First Solar tumbled 12% after the maker of electricity-producing solar modules cut earnings guidance for this year due to tariffs imposed by the Trump administration. Norwegian Cruise Line dropped 7% after warning that cruise demand, which has long defied worrying travel trends, is beginning to weaken.  Snap plunged 13% after the company declined to issue a sales forecast for the current period, saying it is navigating macroeconomic “headwinds” for its advertising business. Starbucks slumped 8% after weaker-than-expected results in the latest quarter amped up pressure for the company’s new management to deliver. Here are some other notable premarket movers:

• BridgeBio Pharma (BBIO) rallies 9% after the drugmaker reported sales of its recently approved heart drug, Attruby, that crushed expectations.
• Etsy (ETSY) rises 1% after the online marketplace for crafts reported revenue for the first quarter that beat the average analyst estimate.
• Freshworks Inc. (FRSH) climbs 9% after the software-as-a-service company boosted its profit and revenue outlook for the year.
• Garmin (GRMN) falls 6% after the maker of GPS-enabled products posted first-quarter results and provided a year forecast.
• Oddity Tech (ODD) jumps 17% after the direct-to-consumer beauty and wellness company boosted its net revenue guidance for the full year to a level above Wall Street expectations.
• Qorvo (QRVO) climbs 8% after the Apple supplier reported adjusted 4Q earnings that topped estimates.
• Regulus Therapeutics (RGLS) shares are halted after the company entered into an agreement to be acquired by Novartis AG.
• Seagate (STX) gains 7% after the computer hardware and storage company reported third-quarter earnings and revenue that beat the average analyst estimate
• Stride Inc. (LRN) climbs 3% after the online education company boosted its revenue forecast for the full year. Fiscal third-quarter revenue increased 18%.
• Super Micro Computer (SMCI) tumbles 16% after giving preliminary results that fell well short of analysts’ estimates, a sign its comeback plan has been slow to gain traction.
• Tenable (TENB) plunges 17% after the cybersecurity company cut its full-year guidance, with analysts noting lower visibility ahead for the stock due to US federal spending uncertainties.
• Wabash National (WNC) falls 13% after the semi-trailer manufacturing company cut its revenue guidance for the full year.

Investors have been cautiously optimistic, with the Nasdaq 100 close to erasing all of its losses this month, after tariff U-turns and speculation the Federal Reserve will cut interest rates to prevent a recession.  

“Perhaps we are past peak uncertainty,” Kim Crawford, global rates portfolio manager at JPMorgan Asset Management, told Bloomberg TV. “The administration has a more conciliatory tone on tariffs and to an extent as well, Fed independence.” Benchmark 10-year Treasuries steadied after six days of gains, with the yield at 4.16%. Gold dropped.

Four of the so-called Magnificent Seven — Microsoft, Apple Inc., Meta and Amazon.com Inc. — are reporting earnings this week. Analysts expect the group — which also includes Google-parent Alphabet Inc., Tesla Inc. and Nvidia Corp. — to deliver an average of 15% profit growth in 2025, a forecast that’s barely budged since the start of March despite the flareup in trade tensions.

“Even if you take out the tariff story outcome I think there is an issue for Big Tech and the market will probably start to refocus on that when we get this earnings season,” Christopher Wood, global head of equity strategy at Jefferies, told Bloomberg TV. “We still have the issue of the massive amount of capex being spent on Big Tech, they’re overspending on this AI story.”

Economic barometers of US economic health are also due with inflation and GDP data Wednesday that will give a snapshot of activity just before President Donald Trump unleashed country-specific levies on April 2. US real GDP growth likely cooled to a standstill in the first quarter amid disruptions from policy shifts, according to Bloomberg Economics.

Veteran emerging-markets investor Mark Mobius said he’s keeping 95% of his funds’ holdings in cash as he waits out the trade-related uncertainty. Hedge funds are reluctant to make major bets amid the turmoil, with the only significant shift in positioning in April being increased bets against US stocks, Bloomberg reported.

In the latest pivot in Trump’s trade strategy, the US president signed an executive order easing the impact of his auto tariffs, preventing duties on foreign-made vehicles from stacking on top of other levies and lessening charges on parts from overseas used to make vehicles in the US. The news supported sentiment toward European auto stocks Wednesday, with Mercedes-Benz Group AG and Stellantis NV rising even after withdrawing their outlooks for this year, citing the uncertainty of trade barriers. 

In a rally celebrating his first 100 days in office, Trump defended his tariff policies as he marked his 100th day in office. He also renewed criticism of Fed Chair Powell, saying he is “not really doing a good job.”

In Europe, the Stoxx 600 rises for a seventh consecutive session, albeit only slightly, as disappointing earnings keep a lid on gains. Travel & leisure stocks are the worst performers. Energy and bank stocks also underperform with notable declines in TotalEnergies and Credit Agricole after their respective updates. Here are some of the biggest movers on Wednesday:

• Societe Generale shares advanced 5.7% after the French lender beat estimates as equities trading hit a record and it booked a gain on disposals.
• DSV shares rise as much as 11% after the Danish logistics firm gave a reassuring set of results, with analysts highlighting the synergies it set out from its DB Schenker deal.
• Schindler shares gain as much as 8.2% after the Swiss elevator and escalator maker reported impressive 1Q results with a dynamic order intake and no change in guidance despite US tariffs.
• Stellantis shares rise as much as 4.2% in Milan after the carmaker released a trading update which Bernstein said included some positives, with pricing ahead of expectations in all key regions.
• VW shares rise as much as 1.4% after the German carmaker reiterated its full-year guidance, a move JPMorgan called a positive signal.
• Deutsche Post shares rise as much as 4.1% after the delivery firm’s Ebit came in higher than expected in the first quarter, driven by its Express and Post & Parcel divisions and aided by cost-cutting.
• Aixtron shares climb as much as 14% after the German chip-tool company’s first-quarter results showed better-than-expected revenue, order levels and positive free cash flow, according to Warburg.
• Remy shares rise as much as 5.7% as analysts highlighted encouraging signs in the Cognac maker’s earnings, including an improvement in its US market as well as a better outlook for 2026.
• UMG climbs as much as 7.1% as subscription growth helps to deliver first-quarter results above expectations.
• Befesa shares rise as much as 13% after the German recycling company’s full-year earnings guidance surprised to the upside.
• AMS-Osram shares soar 17%, with ZKB analysts saying the Swiss chipmaker reported a good start to the year due to strong performance in its semiconductor business.
• Credit Agricole fell as much as 4.5% as higher-than-expected costs and a tax bill weighed on profit.
• TotalEnergies shares fall as much as 4.3% after the French energy company reported results that were in line with expectations, but also an increase in net debt.
• Mercedes shares drop as much as 2.8% after the carmaker said tariff volatility is too high to give a reliable outlook.
• Evolution shares drop as much as 18%. The gambling operator reported a miss on revenue and Ebitda in the first quarter, which management attributes to actions including ring-fencing regulated markets in Europe and countermeasures to cyberattacks in Asia.

Earlier in the session, Asian stocks rose, on track for a fourth-straight day of gains, as investors were encouraged by a continued rally on Wall Street and optimism over potential trade deals with the US. The MSCI Asia Pacific Index gained as much as 0.7%. Sony was among the biggest boosts after Bloomberg reported it is considering spinning off its semiconductor unit, while AIA climbed on strong quarterly results. The regional benchmark is poised to close April more than 2% higher, wiping out a steep intra-month loss sparked by US tariffs. The market has been looking toward various concessions from Washington as well as individual nations’ negotiations with the US. President Donald Trump on Tuesday signed an executive order easing the impact of his auto tariffs, while news emerged of discussions with South Korea and Australia. China’s manufacturing activity in April saw its worst contraction since December 2023, exposing early signs of weakness in Asia’s biggest economy from the trade war with the US. Shares of Chinese banks were among the biggest drags on equity benchmarks in Hong Kong and mainland China after weak earnings. 

In FX, the Bloomberg Dollar Spot Index is little changed. The Aussie dollar outperforms rising 0.2% against the greenback after core inflation rose more than expected. AUD/USD rose as much as 0.5% to 0.6418 before paring the move; the nation’s core inflation in the first quarter beat estimates, damping expectations of rapid rate cuts. The pound and the yen were among the worst performers, down 0.3% and 0.4% against the dollar respectively.

In rates, treasuries mixed with the long-end outperforming where yields are down around 2bp on the day, supported by wider gains seen across the long-end of Germany and UK bonds after a flurry of European economic data. Ahead of today's quarterly refunding announcement, the 10-year US yield are down 1bps to 4.16%. US yields slightly cheaper across the front-end while richer in the long-end of the curve, flattening 2s10s and 5s30s spreads by 1.8bp and 2.5bp on the day; US 10-year yields trade down to around 4.16%, richer by 1bp on the day with bunds and gilts outperforming by 2bp and 2.5bp in the sector. European government bonds gain with little reaction shown to a flurry of economic data releases, including a beat for euro-area first quarter GDP. European government bonds rose; German yields were up to 4bps lower across the curve, with gilts mirroring that move; UK 10-year yield down 4bps to 4.40%

In commodities, oil prices decline, with WTI falling 1% to $59.80 a barrel. Spot gold falls $36 to around $3,280/oz. Bitcoin is steady near $94,800. 

US economic calendar includes April ADP employment change (8:15am), 1Q advanced GDP (8:30am), April MNI Chicago PMI (9:45am), March personal income/spending, PCE price index, pending home sales (10am). Fed’s external communications blackout ahead of the May 7 FOMC meeting

Market Snapshot

• S&P 500 mini -0.1%
• Nasdaq 100 mini -0.2%
• Russell 2000 mini little changed
• Stoxx Europe 600 +0.2%
• DAX +0.5%, CAC 40 +0.4%
• 10-year Treasury yield -1 basis point at 4.16%
• VIX +0.3 points at 24.48
• Bloomberg Dollar Index little changed at 1222.44
• euro -0.1% at $1.1371
• WTI crude -1.3% at $59.63/barrel

Top Overnight News

• US President Trump said he achieved the 100 most successful days for a president in US history, while he noted a lot of auto jobs and companies are coming in and we're restoring the rule of law and ending the inflation nightmare. Trump renewed his criticism of Jerome Powell, saying the Fed chair’s “not really doing a good job.” He also championed his tariff regime at a rally that came just hours after he signed a pair of executive orders pulling back some of his auto levies.
• US Secretary of State Marco Rubio plans to speak with the foreign ministers of India and Pakistan in an attempt to calm tensions. BBG
• Trump continues to float fresh tax cut proposals while Republicans struggle to agree on ways to lower the cost of the reconciliation bill. Axios
• Top Trump advisor reportedly struggled to soothe investors in talks after market tumult in which Stephen Miran met with hedge funds and big asset managers after tariffs sparked Wall Street turmoil, according to FT.
• China’s factory PMI slipped into the worst contraction since December 2023, revealing early damage of US tariffs. Beijing has created a list of US-made products that would be exempted from its 125% tariffs. BBG
• Chinese sovereign investor CIC is selling about $1 billion of its private equity investment portfolio in the secondary market. The assets are held in a number of funds managed by eight U.S. fund managers, including Blackstone Inc and Carlyle Group. RTRS
• Huawei has started the delivery of its advanced AI chip “cluster” to Chinese clients who are increasing orders after being cut off from Nvidia’s semiconductors because of Washington’s export restrictions. FT
• Japan eco data falls short for Mar, including retail sales (-1.2% M/M vs. the Street -0.7%) and industrial production (-1.1% M/M vs. the Street -0.4%). BBG
• The euro-area economy grew 0.4% last quarter, more than expected, though is yet to feel the full force of US tariffs. The German and French economies returned to growth. BBG

A more detailed look at global markets courtesy of Newquawk

APAC stocks failed to sustain the positive handover from Wall St and traded mixed at month-end as the region digested a slew of data including disappointing Chinese official PMIs, while there was a muted reaction and very few surprises from US President Trump's speech to commemorate his first 100 days back in office. ASX 200 eked mild gains as strength in tech, healthcare and financials offset the losses in the utilities and commodity-related sectors but with the upside limited after firmer-than-expected CPI data saw money markets fully price out the chances of a larger 50bps RBA rate cut in May. Nikkei 225 was choppy with the upside contained following disappointing Industrial Production and Retail Sales, while the BoJ also kick-started its two-day policy meeting and there were some comments from a group representing major foreign automakers which noted that President Trump's latest tariff order for autos provides some relief but more must be done. Hang Seng and Shanghai Comp were indecisive after official Chinese Manufacturing and Non-Manufacturing PMIs disappointed although Caixin Manufacturing PMI topped forecasts, while the mainland heads into a five-day weekend owing to Labor Day holiday closures and participants also reflected on key earnings releases including disappointing results from China's Big 4 banks.

Top Asian News

• Chinese President Xi says China is to adjust economic plans based on global change; to promote transformation of traditional industries; says they are to stabilize markets and expectations Urges to address weak links in economy. Urges to achieve goals in all aspects. Says to understand impact of changes in international situation. Says China to optimize economic planning based on situations. Urges measures to stabilize employment. Says to promote transformation of traditional industries. Says China to adjust economic plan based on global change. Says China needs to adapt to changing situations.
• China NPC standing committee passed the private sector promotion law which will take effect from May 20th.
• Australian Treasurer Chalmers said the market expects more interest rate cuts after inflation figures and he doesn't see anything in the data as substantially altering market expectations.

European bourses (STOXX 600 +0.2%) opened mostly firmer and have traded tentatively within a tight range ahead of the day’s key risk events. European sectors hold a strong positive bias; Media (lifted by post-earning strength in UMG) and Telecoms takes the top spots, whilst Travel & Leisure and Basic Resources underperform. rnings include: Mercedes Benz (-0.8%) down Y/Y, high uncertainty noted; Volkswagen (U/C) miss, expects results at lower-end of guidance; UBS (+0.2%) beat; Stellantis (+1.5%) in-line, suspends guidance; Barclays (-0.3%) beat, upgrades NII guidance; GSK (+4%) beat; TotalEnergies (-3.2%) mixed, continue buybacks, confident in growth objective; ASM International (U/C) orders & margin beat; Air France (+1.6%) beat, confirms outlook; Iberdrola (-1.3%) mixed, expect strong performance ahead.

Top European News

• Germany's SPD has approved the coalition deal with the CDU/CSU, via Reuters citing sources. SPD's Klingbeil will be the Vice Chancellor and Finance Minister of the new German Government, according to German media.

FX

• DXY is currently building on Tuesday's gains in quiet trade. The two main drivers for price action were relief on the tariff front (autos) and soft US data (JOLTS and Consumer Confidence). Data will likely provide some impetus for the Greenback today with Q1 GDP/PCE and monthly PCE due on the docket. Q1 GDP may be seen as stale in some quarters given its precedes the announcement of US tariffs. DXY has ventured as high as 99.43 with Monday's peak at 99.83.
• EUR softer vs. the USD in what has been a busy morning of data which kicked off with steady French GDP, hot French inflation and in-line German GDP which saw the nation avoid a technical recession, but ultimately showed a Y/Y contraction. Thereafter, Eurozone GDP exceeded expectations (Q/Q 0.4% vs. Exp. 0.2%) but failed to have any sway on the EUR given that it doesn't capture the impact of Trump's tariffs (aside from some potential front-loading of orders).
• USD/JPY is higher after Japanese Industrial Production and Retail Sales disappointed overnight, prompting concerns over a negative outturn for Q1 GDP. Attention now turns to the BoJ, where the Bank is expected to keep rates steady. USD/JPY is north of Tuesday's high at 142.75 but is yet to approach the 143 mark.
• GBP is slightly softer vs. the USD and EUR with fresh macro drivers on the light side. Tier 2 data via the Lloyds Business Barometer and Nationwide House Index had little sway on GBP. On the trade front, the Guardian reports that US officials have split trade negotiations into three phases; the UK has reportedly been placed in either phase two or three. UK officials are also concerned that any EU-UK deal could make negotiations with the US more challenging.
• AUD is the marginal outperformer across the majors on account of firm inflation metrics overnight (Q/Q 0.9% vs. exp. 0.8%, Y/Y 2.4% vs. exp. 2.3%).
• PBoC set USD/CNY mid-point at 7.2014 vs exp. 7.2670 (Prev. 7.2029).

Fixed Income

• A relatively contained start to the session with USTs holding onto Tuesday’s spoils, firmer by a handful of ticks in a 112-03 to 112-09 band. Limited resistance in the near-term, nothing of particular note until 114-03+ from early April and thereafter 114-10. On the data front, the docket begins with ADP as a preview into Friday’s NFP. Thereafter, Q1 GDP, PCE and Employment Costs due. Afterwards, we get the monthly PCE figure.
• Bunds began the morning holding at the top-end of Tuesday’s 131.16-46 parameters, in-fitting with USTs. Then, after the European cash equity open, EGBs began to gradually pick up and despite being knocked briefly by marginally hotter German state CPI metrics than mainland consensus implies, Bunds are at a fresh 131.74 peak. EZ GDP metrics came in above expectations, but ultimately had little impact on the complex given the survey period does not include the implementation of Trump tariffs. German 2041 & 2044 outings were mixed, but ultimately had little impact on the complex.
• Gilts are outperforming, gapped higher by just over 10 ticks and then in-fitting with EGBs after the cash equity open began to extend higher and hit a 93.68 high for the session. Strength occurs despite a lack of fresh drivers in today’s session thus far aside from supply, an auction that came in strong with another b/c well clear of the 3x mark and a slim tail. Results sparked a modest bid in Gilts but one that occurred within existing 93.35-68 confines.
• UK sells GBP 4.5bln 4.375% 2028 Gilt: b/c 3.48x (prev. 3.27x), average yield 3.834% (prev. 4.263%) & tail 0.2bps (prev. 0.4bps).
• Germany sells EUR 1.143bln vs exp. EUR 1.5bln 2.60% 2041 and EUR 0.452bln vs exp. EUR 0.5bln 2.50% 2044 Bunds.

Commodities

• Crude is softer for the third session in a row following yesterday's slide which now sees WTI back under USD 60/bbl. Desks pin the downside to ongoing tariff risks alongside expectations of OPEC+ further opening the taps. Furthermore, the bearish Private Inventory report on Tuesday only adds to the downbeat mood. Brent July in a USD 62.17-63.34/bbl range.
• Precious metals are lower across the board amid a firmer dollar intraday and following US President Trump softening the Auto tariffs, which further unwinds some risk premium. Spot gold resides in a USD 3,280.28-3,328.16/oz range at the time of writing, within Monday's USD 3,268-3,353.20/oz range.
• Hefty losses across base metals against the backdrop of a firmer dollar coupled with a cautious risk tone. 3M LME copper is currently in a USD 9,206.17-9,436.60/t range at the time of writing.
• Equinor (EQNR NO) CEO says European gas storage is low, expect a tight market during refilling. Europe will need 200-300 extra LNG cargoes to refill storage this year.
• US Private inventory data (bbls): Crude +3.8mln (exp. +0.5mln), Distillate -2.5mln (exp. -1.7mln), Gasoline -3.1mln (exp. -1.2mln), Cushing +0.7mln.
• Chile's Codelco Chairman said April Copper production +22% Y/Y.

Geopolitics: Middle East

• "Israeli government statement: On Netanyahu's instructions, the army carried out a strike against a group that tried to attack the Druze in Sahnaya (Syria)", via Sky News Arabia.
• Iranian Foreign Minister Araqchi says US sanctions send a negative message during the nuclear talks; E3 will hold talks in Rome on Friday and with the US on Saturday.
• UK forces participated in a joint operation with US forces against a Houthi military target in Yemen, while the UK said the strike was conducted after dark when the likelihood of any civilians being in the area was reduced and all aircraft returned safely.

Geopoltiics: Ukraine

• Kremlin spokesperson says settlement should be reached with Ukraine, and not the US, via Tass "We are working very intensively with the US on Ukraine".
• US President Trump said he thinks Russian President Putin wants peace but he was not happy when he saw Putin shooting missiles, according to ABC News.
• White House Press Secretary said President Trump is confident the Ukraine minerals deal will be signed.

Geopolitics: Other

• Pakistan's Information Minister said they have credible evidence that India is planning "military aggression" against Pakistan within 24-36 hours.
• North Korea conducted the first test firing of a new warship, according to Yonhap. It was also reported that South Korean intelligence assessed that North Korea's combat capabilities have improved and that North Korea suffered 600 deaths during its dispatch of troops to Russia, while South Korean intelligence is monitoring a possible surprise summit between North Korea and the US.

US Event Calendar

• 7:00 am: Apr 25 MBA Mortgage Applications -4.2%, prior -12.7%
• 8:15 am: Apr ADP Employment Change, est. 115k, prior 155k
• 8:30 am: 1Q A GDP Annualized QoQ, est. -0.15%, prior 2.4%
• 8:30 am: 1Q A Personal Consumption, est. 1.16%, prior 4%
• 8:30 am: 1Q A GDP Price Index, est. 3.1%, prior 2.3%
• 8:30 am: 1Q A Core PCE Price Index QoQ, est. 3.1%, prior 2.6%
• 8:30 am: 1Q Employment Cost Index, est. 0.9%, prior 0.9%
• 9:45 am: Apr MNI Chicago PMI, est. 45.9, prior 47.6
• 10:00 am: Mar Personal Income, est. 0.4%, prior 0.8%
• 10:00 am: Mar Personal Spending, est. 0.6%, prior 0.4%
• 10:00 am: Mar PCE Price Index MoM, est. 0%, prior 0.3%
• 10:00 am: Mar PCE Price Index YoY, est. 2.2%, prior 2.5%
• 10:00 am: Mar Core PCE Price Index MoM, est. 0.1%, prior 0.4%
• 10:00 am: Mar Core PCE Price Index YoY, est. 2.6%, prior 2.8%
• 10:00 am: Mar Pending Home Sales MoM, est. 1%, prior 2%

DB's Jim Reid concludes the overnight wrap

Welcome to the end of 100 days of Trump 2.0 with markets currently in a period of rare calm over this period. Indeed yesterday the S&P 500 (+0.58%) advanced for a 6th consecutive session and marking its best 6-day run (+7.81%) since March 2022. Interestingly, the latest gain means the index is now out of technical correction territory again, and now “only” stands -9.49% beneath its record high in mid-February and -1.94% below pre Liberation Day levels. This comes ahead of Microsoft and Meta’s earnings after the bell tonight and Amazon and Apple tomorrow. So these will go a long way towards dictating the sentiment of markets given we’re out of the most intense gravitation pull of Liberation Day now. It feels that in the last month or so AI has hardly been discussed as an investment theme after 2 years where it was the only game in town.

The main trigger for yesterday’s risk-on mood were headlines that Trump would announce some auto tariff relief ahead of tariffs on auto parts coming into force next weekend. The measures, signed later in day, prevent tariffs on autos and on steel and aluminium from stacking up on top of each other and provides partial rebates for domestic car makers on imported auto parts for the first two years. The President framed the move as giving companies “a little flexibility” at a rally yesterday evening, at which Trump also renewed his criticism of Fed Chair Powell, saying he's "not really doing a good job".

Those tariff headlines supported markets in spite of a weak batch of economic data. That included the Conference Board’s latest consumer confidence indicator, which fell to 86.0 in April (vs. 88.0 expected). Not only is that the weakest since May 2020 at the height of the pandemic, but the expectations component saw an even bigger slump to 54.4, marking its lowest since October 2011 when the post-GFC recovery was stalling and the Euro Crisis was escalating. In the meantime, the latest JOLTS report also showed job openings fell to a 6-month low in March of 7.192m (vs. 7.5m expected). Obviously that’s covering a period before Liberation Day, so markets weren’t too focused on that, but it still meant that the ratio of vacancies per unemployed individuals fell to 1.02, which is its lowest so far this cycle.

The read across for risk assets was probably limited by the fact that the Conference Board reading is still a survey and while the surveys have been consistently negative of late, hard data have been mostly holding up. So it didn’t lead to a major re-assessment about the growth outlook in the way that a negative jobs report might have done. On top of that, the details of the JOLTS report did include some more positive elements, as the quits rate of those voluntarily quitting their job hit an 8-month high of 2.1%. It also didn’t show an escalation in layoffs, as the layoffs and discharges rate fell back to a 9-month low of 1.0%. So it meant investors could still plausibly believe the narrative that a recession would be avoided, even if sentiment had taken a big hit.

However, the more negative data immediately led investors to price in more Fed rate cuts this year. For instance, the amount of cuts priced by December moved up to 97bps, which is the highest since April 8, just before Trump announced the 90-day tariff extension. In turn, that led Treasury yields to fall across the curve, with the 2yr yield (-4.4bps) falling to 3.65%, its lowest level since October, whilst the 10yr yield (-3.6bps) fell to 4.17%.

Looking forward, we’ll get a key piece of data today with the Q1 GDP release. Obviously that’s backward-looking and covers the period before Liberation Day, but it will give a strong indication of the extent to which people might have tried to import goods to get ahead of the tariffs. Indeed, yesterday we found that the goods trade deficit hit a record $162bn in March (vs. $145bn expected). So that led to a decent hit in GDP trackers, given that imports subtract from GDP growth. Indeed, the Atlanta Fed’s GDPNow estimate for Q1 is now at an annualised contraction of -2.7%, and their alternative model that adjusts for imports and exports of gold is still at a contractionary -1.5%. And our own US economists have updated their expectation to a real GDP to contraction of -0.9% in Q1 due to the surge in imports (see their note here). If today’s number does show a decline, that would be the first quarterly contraction since Q1 2022.

For now at least, equities continued their rally, with the S&P 500 (+0.58%) moving up to its highest level since Liberation Day, led by financials (+0.97%) and materials (+0.93%). Energy stocks (-0.37%) underperformed as Brent crude oil fell -2.44% to $64.25/bbl. Over in Europe, there was also a strong performance, with the STOXX 600 (+0.36%) posting a 6th consecutive gain as well, whilst the DAX (+0.69%) outperformed. The DAX has now entirely erased its losses since Liberation Day, leaving the index +0.16% above its level on April 2 and +12.64% YTD as opposed to -5.45% for the S&P 500. Meanwhile in the UK, the FTSE 100 (+0.55%) posted a 12th consecutive gain, which made it the longest run of gains since 2017.

Overnight S&P 500 (-0.47%) and NASDAQ 100 (-0.64%) futures have fallen, not helped by a -17% after hours drop in Super Micro Computers after posting disappointing results. This is a company that was a darling of the AI world and peaked out at around 118 early in 2024 and will likely open in the low 30s today. The rest of Asia is largely consolidating with the S&P/ASX 200 (+0.24%), Nikkei (+0.17%) and Hang Seng (+0.22) seeing small gains but with mainland Chinese stocks broadly flat. Elsewhere, the KOSPI (-0.60%) is lagging behind its regional peers.

Coming back to China, the official manufacturing PMI contracted to 49.0 in April this morning, falling short of the expected 49.7 and significantly lower than the previous month's 50.5. This contraction is clearly being attributed to the escalating trade war with the US. The non-manufacturing PMI also disappointed, dropping to 50.4 in April, below the anticipated 50.6 and down from 50.8 in March. Consequently, China’s composite PMI decreased to 50.2 in April from 51.4 in March, barely remaining above the 50 expansion threshold.

Elsewhere, Australia's Q1 inflation edged up to +2.4% year-over-year (expected +2.3%), holding at a four-year low. The RBA's preferred trimmed mean inflation rate fell from a revised +3.3% to +2.9% in March (expected +2.8%). The data is likely to reinforce the central bank's cautious stance and dampen expectations for aggressive interest rate cuts in the near term. Against this background, the Australian dollar is holding on to its gains, strengthening +0.27% to trade at 0.6401 against the dollar. Meanwhile, yields on the 3yr policy sensitive government bonds are -0.7bps lower settling at 3.31% as we go to print.

Turning to back Germany, today is an important one in the process to forming a new government, as the vote of the SPD membership on the coalition treaty concludes. In light of this, our economists have put out a fresh note going through that vote (link here), as well as the fiscal timelines for the 2025 budget. Their view is that there is little event risk from the SPD vote, and that they don’t expect any additional fiscal support measures (beyond the coalition treaty) unless there are tangible signs of the trade shock materialising.

Finally in Europe, sovereign bonds put in a decent performance across the continent, with yields on 10yr bunds (-2.3bps), OATs (-1.9bps) and BTPs (-2.1bps) all falling back. That came as the European Commission’s latest economic sentiment indicator fell by more than expected in April, down to a 4-month low of 93.6 (vs. 94.5 expected). Separately, the ECB’s survey of consumer inflation expectations showed 1yr expectations up to +2.9%, the highest since April.

To the day ahead now, and US data releases include PCE inflation for March, Q1 GDP, the Q1 Employment Cost Index, and the ADP’s report of private payrolls for April. Meanwhile in Europe, we’ll get the flash CPI reading for April from Germany, France and Italy, along with German unemployment for April. From central banks, we’ll hear from the ECB’s Muller, Villeroy and Makhlouf. Finally, today’s earnings releases include Microsoft, Meta and Caterpillar.

Tyler Durden Wed, 04/30/2025 - 08:17

Super Micro Tanks On Disappointing Preliminary Results

Shares of Super Micro Computer plunged in premarket trading in New York after the U.S.-based technology company reported preliminary third-quarter results that missed Bloomberg Consensus estimates. 

Analysts at JPMorgan do not believe the revenue miss signals a broader industry demand slowdown. Meanwhile, Goldman analysts recently revised their peak data center capacity forecasts forward from late 2026 to this year. 

"During Q3 some delayed customer platform decisions moved sales into Q4," Super Micro wrote in a business update and preliminary financial results press release on Tuesday evening, adding that it also saw "higher inventory reserves resulting from older generation products."

Super Micro produces, designs, and manufactures high-performance servers, storage systems, and networking equipment. It's a key supplier of data center hardware, and preliminary results may paint an ominous outlook for the artificial intelligence bubble. 

The preannouncement forecasted third-quarter revenue between $4.5 billion and $4.6 billion, with earnings per share of 29 to 31 cents — both well below the prior guidance of $5 billion to $6 billion in revenue and earnings per share of 46 to 62 cents.

Goldman analysts Michael Ng and others provided their first take on the preannouncement:

Bottom line: SMCI should trade lower on the negative preannouncement which includes a revenue miss – at least in part driven by customer platform decision delays into next quarter – as well as a 220 bps gross margins qoq decline on higher inventory reserves on old products and new product expedite costs. We view read-throughs to the broader AI infrastructure group (e.g., DELL, ANET) as negative given the reference to platform decision delays and the gross margin pressure.

SMCI negatively pre-announced F3Q25 with a revenue, gross margin, and EPS miss. Revenue of $4.5-$4.6 bn missed GS/consensus of $5.3/$5.4 bn (prior guidance of $5.0-$6.0 bn) with SMCI citing customer delays into F4Q. Gross margins of 9.7% declined 220 bps qoq and reflected higher inventory reserves from older generation product and expedite costs to enable time-to-market for new products. EPS of $0.29-$0.31 missed GS/consensus of $0.53/$0.53 (prior guidance of $0.46-$0.62). SMCI will have its earnings call on May 6 after-market.

Ng is "Sell" rated on Super Micro ...

Here's additional analyst commentary on Super Micro (courtesy of Bloomberg):

Bloomberg Intelligence

• "Super Micro's preannounced 15% 3Q sales miss vs. prior guidance is indicative of a reliance on mega-AI deals," but "sustained product-design wins suggest AI-server activity could still be intact, despite economic concerns"

JPMorgan (neutral, PT to $36 from $39)

• The magnitude of the Super Micro miss is not representative of industry-wide challenges

• "Given the limited visibility around the opportunity for SMCI to completely catch up to the revenue push-out in the next quarter"

Citi (neutral, PT $39)

• "The company cited gross margin declined 220bps qq (Street at 12.0%) on higher inventory reserves and expedite costs, while some customer platform decisions were delayed, shifting sales to 4Q"

Lynx Equity Strategies

• "Investor concern is obviously going to be whether the much- anticipated AI capex cuts" is hurting SMCI, but "we do not think there has been a fundamental change in end market dynamics"

• "Whereas there could be some churn in orders from data centers, we think the US-based nature of SMCI's production renders their shipments to US customers relatively safe"

Remember last year, when Super Micro delayed its annual report and Ernst & Young abruptly resigned as auditor — a double whammy that sent shares crashing.

As of Tuesday's close, shares remain 70% below the all-time high of nearly $120 a share, established in early 2024. Shares have yet to recover - and crashed more in premarket on the negative preannouncement, down around 18% at the $29 handle.

Will end with pointing readers to Goldman's note from three weeks ago, which highlights that the peak data center capacity forecast was revised and brought forward (read: here). 

Tyler Durden Wed, 04/30/2025 - 08:05

Mercedes Cites "Tariffs & Volatility" In Yet Another Withdrawal Of Guidance For Automakers

Some of Europe's largest automakers have withdrawn their financial guidance for the year, citing mounting macroeconomic uncertainty sparked by President Trump's trade war. While Trump signed an order Tuesday easing specific auto tariffs, Mercedes-Benz Group still withdrew its full-year outlook.

"The current volatility with regard to tariff policies, mitigation measures and resulting potential direct and indirect effects in particular on customer behaviour and demand is too high to reliably assess the business development for the remainder of the year," Mercedes warned in an earnings press release for the first quarter. 

Mercedes ships Europe-made vehicles via cargo ships to North America while also producing SUVs, luxury vehicles, EVs, and vans at its Tuscaloosa, Alabama, and Charleston, South Carolina plants.

At its Tuscaloosa plant, Mercedes manufactures SUVs such as the GLE, GLS, GLE Coupe, and the ultra-luxury Mercedes-Maybach GLS, as well as electric models like the EQE and EQS SUVs. In Charleston, the company produces both the Sprinter and e-Sprinter vans. 

On Tuesday evening, President Trump signed an executive order aimed at easing the burden of auto-related tariffs. The order includes provisions to lower duties on steel, aluminum, and foreign-made parts, and prevents multiple tariffs from stacking on a single vehicle. However, the 25% tariff on imported vehicles entering the US remains in place. 

Under the order, additional 25% tariffs on auto parts will begin on May 3, but vehicles that go through final assembly in the US will qualify for partial reimbursements on those levies for two years. 

At a rally in Michigan, Trump told the crowd his administration will "slaughter them [automakers] if they don't" re-shore critical supply chains of parts to the US.

Trump announces a rollback in his tariff policy for automobiles, but then says "we give them a little time before we slaughter them if they don't do this." pic.twitter.com/VyOaVXQi9c

— Aaron Rupar (@atrupar) April 29, 2025

In addition to Mercedes, Stellantis NV, Volvo Car, and General Motors have all pulled their full-year forecasts because of tariffs. 

Volkswagen has left its outlook unchanged for the year but warned it has yet to factor in the tariffs, while Aston Martin has announced plans to limit shipments of its luxury sports cars to the US.

Goldman analyst Jeremy Elster commented on the European auto industry...

AUTOS... trading flat on the day despite the guidance suspensions and cuts.  Tariff relief is part of the explanation. Perhaps not directly, but because it hints at willingness to bend to industry pressuree on relief (more on tariff relief details from mark Delaney here). Going through the prints today:

• Mercedes miss & suspend guide. Saying guide would be in tact were it not for tariffs, which makes P911 material downgrades PRE tariff impacts yesterday look even worse in hindsight. The MBG 1Q is a bit better in the details; Cars margin 7.3% vs cons 6.9%, and yet another strong cash quarter (Ind FCF 2,405m vs consensus 1,790m, a 34% beat), albeit this is somewhat overshadowed by the specific cash comment on tariffs; "negative impacts on the cash conversion rates of the automotive segments cannot be ruled out either".  On the call, company saying fy impact of tariffs from here would be around -300bps to Cars margins (i.e. annualised impact would be higher)… implies material downgrades (as much as 400bps vs 7% margin guide starting point, pre mitigation).

• VW first take is worse of the two German prints. Difficult to marry the optimism we heard from the company through q1 with another margins miss at Brand Group Core, but perhaps tailwinds from stronger Europe production become more evident over q2/q3. Headline group ebit is a -7% miss, margins are a 20bps miss, cash flow is more or less in-line.  Guide is moved to low end of the range, but does not include any impact from tariffs.

• STLAM 1Q is revenues only, but also a small miss (-1% vs consensus). Net price -3.4% looks a little worse than feared. Guidance is suspended. Inventories ticked up slightly vs Q4 to support better expected deliveries in Europe in Q2. We've started to field some more, very hesitant, constructive incoming on STLA given tariff relief in US (relative to German OEMs), but for the stock to turn the market will need more confidence on cash and market share stabilisation.

The trade war adds to the problems for European automakers, who face muted demand across Europe and rising competition from Chinese brands, including BYD. 

Tyler Durden Wed, 04/30/2025 - 07:45

Education Department Finds University Of Pennsylvania Violated Title IX Over Transgender Swimmer

Authored by Aaron Gifford via The Epoch Times (emphasis ours),

The University of Pennsylvania (UPenn) remains in violation of Title IX regulations lingering from a transgender-identifying athlete’s victory in an NCAA women’s swimming title for the school in 2022 and will have 10 days to resolve the issue before the matter is referred to the Department of Justice, federal officials said on April 28.

Students walk between classes in front of College Hall on the campus of the University of Pennsylvania in Philadelphia on Sept. 25, 2017. Charles Mostoller/Reuters

The announcement was made after the Department of Education’s Office for Civil Rights sent a notice of noncompliance to UPenn President Larry Jameson.

Jameson was informed that in addition to complying with current NCAA regulations and President Donald Trump’s February executive order prohibiting males from competing in women’s sports, UPenn was required to relinquish that athlete’s 2022 championship title and issue an apology to the female athletes he defeated.

The Ivy League school is also expected to issue a statement asserting that all its athletic programs comply with Title IX.

Title IX is a federal law enacted in 1972 that prohibits educational institutions receiving federal funding from engaging in sex discrimination and assures fairness for NCAA women’s sports programs. President Joe Biden interpreted Title IX to allow people to participate on sports based on their gender identities instead of based on their biological sex, and Trump reversed that under his executive order.

UPenn must also restore to female athletes their rightful records, titles, and honors, “or similar recognition for Division I swimming competitions misappropriated by male athletes competing in female categories.”

In addition, “the university must send a letter to each female athlete whose individual recognition is restored, expressing an apology on behalf of the university for allowing her educational experience to be marred by sex discrimination,” the April 28 news release said.

In 2022, transgender-identifying UPenn student Lia Thomas won a Division I NCAA women’s swimming championship in the 500-yard freestyle event after competing on the men’s team from 2017–2020.

Riley Gaines, a former Kentucky women’s swimmer who competed against Thomas, and Paula Scanlan, a former teammate of Thomas’s who had to share a locker room with the male athlete identifying as transgender, have lobbied against men’s participation in women’s sports.

“Little girls who look up to Riley Gaines and Paula Scanlan can find hope in today’s action—the Trump administration will not allow male athletes to invade female private spaces or compete in female categories,” Craig Trainor, Department of Education acting assistant secretary for civil rights, said in the news release.

“UPenn has a choice to … do the right thing for its female students and come into full compliance with Title IX immediately, or continue to advance an extremist political project that violates federal antidiscrimination law and puts UPenn’s federal funding at risk.”

The news release does not identify Thomas by name, but it does specify that these events are linked to the NCAA Division I swimming championships.

The Trump administration has already suspended $175 million of UPenn’s federal funding over issues related to the transgender-identifying swimmer.

The Epoch Times reached out to UPenn for comment.

In a March 20 statement, the school noted that it was complying with Trump’s executive orders prohibiting men from competing in women’s sports.

“Penn is in full compliance with this most recent change,” the statement said. “The university’s athletic programs have always operated within the framework provided by the federal government, the NCAA, and our conference.”

The Department of Justice recently announced that it will file a lawsuit against Maine for allowing high school transgender-identifying male athletes to compete on the state’s women’s teams.

Tyler Durden Wed, 04/30/2025 - 07:20

US NatGas Deemed "Oversold" By Goldman Ahead Of Summer

Samantha Dart, Goldman's co-head of Global Commodities Research, told clients on Tuesday that U.S. natural gas prices appear oversold and reaffirmed a bullish price forecast for the summer period, citing tightening market fundamentals. 

"Upside to Sum25 Henry Hub from here. On net, we continue to see U.S. gas prices as oversold. With net long positions by managed money now more normalized and fundamentals tightening into peak summer as discussed above, we maintain our Bal Sum25 Henry Hub forecast of $3.90/mmBtu," Dart said. 

Dart noted that NatGas production may remain elevated into the early summer months, longer than she previously anticipated, though she expects a decline to begin in June. She explained that the recent surge in output is primarily due to previously drilled but uncompleted wells (DUCs) and delayed turn-in-line wells (DTILs) now coming online, describing this as a temporary phenomenon: 

The elevated U.S. natural gas production we flagged recently might last longer into this summer than we expect, but production will ultimately move lower. To be sure, we still expect lower Appalachia production sequentially, as a weather-driven decline in Northeast heating demand pressures local wellhead prices lower1 . However, production levels might ultimately remain above our expectations into early summer. To be clear, EQT commented last week during its earnings call that this surge in production has been largely due to wells that had been previously inventoried - as drilled but uncompleted (DUCs) or delayed turn-in-lines (DTILs) - but are now producing, which we think is consistent with a strong price incentive from 1Q25 Henry Hub having averaged in the high $3s/mmBtu, with local Appalachia prices not far behind. This suggests a one-off boost to local production, with heavy declines rates for the new wells likely setting in from June.

In the Northeast, particularly in Appalachia, Dart said production will likely slide as weak local prices, driven mainly through reduced heating demand, put pressure on wellhead economics. She pointed out that U.S. power burns have recovered faster than modeled, with increased coal-to-gas switching:

C2G starting to respond. At the same time, power burns have started to recover vs our modeled expectations, suggesting that utilities are likely increasing C2G switching following the drop in gas prices. The gas share of U.S. thermal generation has started to rise and is now at the highest level year to date at 70%.

She pointed out that NatGas-fired generation now accounts for 70% of U.S. thermal generation, the highest level so far this year. 

Tyler Durden Wed, 04/30/2025 - 06:55

Netanyahu's Wife Caught On Mic Saying 'Fewer' Than 24 Hostages Alive In Gaza

It appears that Israel has intelligence which strongly suggests the majority of 59 hostages remaining in Gaza are dead. It has long been acknowledged that at least some of the captives are deceased, but the Israeli government has kept a tight lid on information it has on the numbers.

And Israeli Prime Minister Benjamin Netanyahu’s wife Sara has unleashed new controversy, heightening tensions and outrage from victims' families. She was heard on a hot mic at an event on Monday saying that "fewer" than 24 hostages are still alive in Gaza.

via Flash90

It's unclear whether she intended to be heard by the audience at a moment her husband, PM Benjamin Netanyahu was speaking, but she muttered something key and it was picked up by the microphone.

Below is CNN's account of what happened and what was said:

"We have of course an important task, not only to win but also to bring home (the hostages)," Netanyahu said at a meeting with Israeli holiday torchbearers on Monday. "Until today we have returned 196 of our hostages, 147 of whom were alive. There are… up to 24 living. Up to 24 living."

"Fewer," Sara Netanyahu interrupted quietly, seated to her husband’s right.

"I say up to," Netanyahu quickly responded. "And the rest are, I’m sorry to say, not alive. And we will return them."

Lately Israeli officials have issued alarm, saying they believe more hostages may be in danger of dying as the conflict drags on. Ceasefire negotiations with Hamas have been collapsed and nonexistent for months at this point.

Victims' families and anti-Netanyahu protesters have demanded the resumption of the truce deal, in order to see the remaining captives released. The Netanyahu government has instead opted for a military solution.

"On the eve of Memorial Day, you sowed indescribable panic in the hearts of the families of the hostages – families already living in agonizing uncertainty," the Hostages and Missing Families Forum said in a statement, blasting Israeli leadership.

"If there is intelligence or new information regarding the condition of our loved ones, we demand full disclosure," the group said, and urged that if the prime minister's wife has new information she should make it known immediately.

"If the wife of the prime minister has new information about the kidnapped who were killed, I demand from her to know if my Matan is still alive, or if he was murdered in captivity because your husband refuses to finish the war," Einav Zangauker, the mother of one of the hostages, also said on social media, as quoted in CNN.

Israel's military has vowed to eradicate Hamas, but that's easier said than done given the vast tunnel network of the terror group remains in place. It's also believed there are still tens of thousands of Hamas fighters.

Tyler Durden Wed, 04/30/2025 - 05:45

Decoding Baby Formula: How U.S. And European Standards Compare

Authored by Jennifer Sweenie via The Epoch Times (emphasis ours),

From the moment Jess’s infant son transitioned from breastfeeding to baby formula, feeding became a source of distress—for both mom and baby. Every bottle of any U.S.-made brand seemed to trigger a bout of vomiting, his tiny body rejecting each feeding. Jess took to doing her research, and against her doctor’s guidance, made the switch to a European-made formula. The vomiting stopped with the swap, granting a sliver of respite for both baby and mom.

New Africa/Shutterstock

“My pediatrician told me that I was ‘endangering’ him by using a European formula that wasn’t FDA approved,” Jess Davidoff told The Epoch Times.

However, as Jess discovered, her pediatrician’s warning didn’t quite align with reality. The debate over what makes a “good” infant formula is intensifying as American parents increasingly turn to European brands. Interest in overseas products isn’t just about preference—it also highlights significant disparities in regulatory standards, differences in essential fats, controversial carbohydrates, and how transparently formulas are labeled. Understanding these differences empowers parents to make informed choices for their children and supports the health and development of American infants.

‘Good’ Formula

Choosing the best formula requires understanding labels and ingredients, regardless of its country of origin. Several critical factors come into play:

Essential Nutrients

Infant formula serves as the primary source of nutrition for many babies during their first year, making its composition essential for healthy development. Key nutrients found in breast milk to look for in formula include:

DHA and ARA: These long-chain polyunsaturated fatty acids are essential for brain and eye development. European regulations have historically mandated minimum levels of DHA in infant formula, whereas the amounts in U.S. varieties may vary and, on average, are much lower than what Europe requires.

Prebiotics and Probiotics: Gut health is vital for babies’ digestion, immunity, and even brain development. Regulations regarding the inclusion of prebiotics and probiotics, and the specific strains and amounts, can vary between the United States and Europe. European standards often impose stricter guidelines.

Vitamins and Minerals: Both the FDA and European authorities set minimum, and sometimes maximum, levels for micronutrients in infant formula to ensure babies receive adequate nutrition. However, the specific requirements for certain vitamins and minerals can differ. A 2023 study published in Nutrients found that the average iron level in U.S. formulas is higher than what Europe allows. Almost 96 percent of the formulas tested in the United States exceeded the European iron limit.

Quality

Ingredient quality and how they are processed can impact the overall nutritional value and potential health effects of infant formula.

Organic formulas, made with milk from cows raised without hormones or routine antibiotics and fed organic feed, are more prevalent and strictly regulated in Europe. European organic formulas are also more likely to be made from grass-fed cows and contain probiotics.

The organic market in the United States is growing, but conventional formulas produced from cows raised according to standard agricultural practices still dominate.

Processing methods can affect the bioavailability of nutrients, such as milk proteins and calcium. Some newer processing methods aim to preserve more heat-sensitive nutrients. While both U.S. and European manufacturers follow safety standards, the specific techniques they use might vary.

Additives, such as emulsifiers, stabilizers, and preservatives, are common in formula, but the types and amounts allowed are more restricted in Europe. Some ingredients found in U.S. formulas might be restricted or banned in Europe due to potential health concerns, including exposure to antibiotics and pesticides.

Macronutrient Content

When it comes to macronutrients, lactose is the primary carbohydrate used in both regions to mimic breast milk. It is generally well digested by infants and supports the growth of beneficial gut bacteria. However, European standard formulas almost exclusively use lactose, while U.S. formulas use corn syrup solids, which may affect blood sugar, weight gain, and gut health. Due to these concerns, European regulatory bodies tend to be more cautious than the United States about allowing corn syrup solids in standard infant formulas.

As for Jess’s son, who regurgitated his formula, it turned out he had a severe corn allergy and was reacting to the corn syrup solids in the U.S. formula.

According to Dr. Michelle Perro, an integrative pediatrician with more than four decades of experience, the corn syrup solids are highly processed, but there may still be residual corn protein in the formula. She told The Epoch Times that producing corn syrup involves extensive processing, which, in her view, may contribute to health issues in some children.

“We are seeing an explosion of food sensitivities, intolerances, and allergies—it is off the charts,” said Perro.

Jess’s son’s corn allergy manifested with multiple concerning symptoms, including thinning hair and nails, vomiting, eczema, and hernias—one of which required surgery. Thirty-two doctors dismissed her concerns about a food-related cause, but her mother’s intuition prevailed. She meticulously tracked his food until the culprit revealed itself—all stemming from the introduction of U.S.-based formula containing corn.

“The sugar used has to change. We [the United States] cannot use the synthetic corn syrup derived from GMO corn,” Perro said.

Both European and U.S. formulas typically use a blend of vegetable oils to mimic the fatty acid profile of breast milk. Common oils include palm oil, soy oil, coconut oil, and sunflower oil. European formulas often highlight the inclusion of medium-chain triglycerides, which are easily digestible and provide a quick source of energy. There may also be a greater emphasis on the quality and processing of these oils compared with U.S. standards.

Proteins in formula—usually cow’s milk—aim to match breast milk’s whey-to-casein ratio, often more closely in European formulas than U.S. varieties. Both markets offer formulas with partially or extensively broken down hydrolyzed proteins. Additionally, both the United States and Europe offer formulas made with goat’s milk or soy protein for infants with specific dietary needs. Regulations regarding these alternative protein sources and the extent of processing may differ by region.

Ultimately, transparent labeling is essential for parents making informed choices about infant formula ingredients and nutrient content. European standards often provide more detailed information about ingredient sources and the specific types and amounts of certain components, such as prebiotics and probiotics.

Heavy Metals Are a Concern

Heavy metals can be present in baby formula in the United States and Europe. The European Union generally has stricter limits on heavy metals and contaminants in baby formula than the United States, and continuously updates its regulations to reduce allowable levels. The stricter regulations on heavy metals are a major reason some parents prefer European formulas.

The FDA does not currently require manufacturers to routinely test infant formula for heavy metals. Instead, it has a “Closer to Zero“ initiative that aims to gradually reduce the amount of harmful metals babies and children are exposed to in food. The initiative focuses on conducting research, setting guidelines for the food industry, and monitoring progress over time

Perro referenced the FDA’s Total Diet Study, a program that’s been running since the 1960s and initially focused on measuring radioactivity in food. The study, conducted periodically, monitors the safety and nutritional quality of the U.S. food supply. In its most recent publication, released in 2022, the Total Diet Study analyzed approximately 910 foods to assess contaminant levels. Of the 910 foods, four were infant formulas—and two of those contained toxic metals, including uranium. Despite these findings, Perro said, no public recalls or follow-up investigations were announced, raising concerns about regulatory oversight.

“To think that the FDA is protecting us is a stretch,” she noted, voicing frustration over what she sees as inadequate action regarding contamination in infant formula

Perro suggested that potential sources of toxic metals could include cow feed, processing methods, and environmental factors such as geoengineering—large-scale climate interventions like solar radiation management. While further research is needed to pinpoint the source in the U.S. formula manufacturing system, the presence of these metals is alarming due to the potential health effects.

Heavy metals found in infant formula and their effects include:

Lead: Per the FDA, there is no known safe level of exposure to lead. It poses the greatest risk during brain development and can cause neurological impairments, including learning and behavioral difficulties, and lower IQ.

Mercury: Mercury exposure during active brain development may cause reduced intelligence, memory and cognitive problems, and motor skill difficulties. Emerging evidence also suggests attention may be affected, according to the FDA.

Arsenic: The FDA links arsenic exposure with adverse neurological effects such as learning disabilities, behavioral difficulties, and reduced IQ. Fetuses, infants, and children are especially vulnerable because of their smaller bodies and rapid development.

Cadmium: Because the body eliminates cadmium slowly, long-term exposure can weaken bones and may contribute to kidney and reproductive problems, heart disease, and diabetes, according to the FDA.

A 2024 meta-analysis published in Science of the Total Environment concluded that cadmium exposure is strongly associated with an increased risk of developing chronic kidney disease. Researchers reviewed 31 studies and found that even small amounts of cadmium exposure pose a long-term concern due to its persistence in the body.

Perrro said one of the most troubling effects of heavy metal exposure in infants is its effect on gut health and the subsequent lifelong repercussions.

She explained that toxic metals can disrupt the microbiome, potentially preventing babies from developing a healthy innate immune response. According to Perro, this kind of gut disruption could set the stage for conditions such as eczema, gut-induced asthma, autoimmune disorders, and food allergies, possibly setting the stage for additional health challenges later in life.

She also emphasized the neurological effects of toxic metals, which she believes may play a role in the development of neurodevelopmental conditions such as autism spectrum disorder, attention-deficit/hyperactivity disorder, sensory processing disorders, sleep disturbances, and other behavioral challenges. Additionally, Perro expressed concern about possible metabolic disruptions and the long-term risk of kidney disease, particularly from cadmium exposure.

“Whatever happens to baby is setting up that baby for their immunologic well-being for the rest of their lives,” she said.

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Tyler Durden Wed, 04/30/2025 - 05:00