James Brodie
Head of Learning & Development, Flux
Gov Finances in Mess, NWE Jet Fuel Imports Hit Lows, Data Today
Yields surge, GBP at risk; Iran blockade looms; fuel tight; consumers pessimistic; wheat spikes; markets wobble, tech crowded
UK 10-year yield rise above 5% and trending higher with government finances in a terminal mess, soon the Pound will get unwanted attention too.
Equities take a step back with the dollar higher again and precious metals trending lower.
Trump has ordered preparations for an indefinite blockade of Iran after telling advisors in the Situation Room that resuming bombing or walking away were both riskier, per WSJ. Trump says the blockade will continue to pressure Iran into "capitulation on the nuclear issue." Iran said two days ago it will never discuss nuclear under current conditions.
Jet fuel imports into Northwest Europe have fallen to record lows, with loadings below 200,000 barrels per day and volumes near 2 million bpd. EU refiners are already at full capacity, while extra supply from Africa and the U.S. (100,000–150,000 bpd) still does not replace lost Middle East flows (~300,000 bpd).
Gas prices in the U.S. have reached another wartime high. The average price of regular gasoline in the U.S. rose more than 6 cents yesterday to $4.18 a gallon. Prices have now risen $1.19 since Feb. 28, the day the Iran war broke out.
“The problem is that if you buy the S&P at this current valuation, the 10-year forward return is negative when you buy the S&P with a PE of 22. That's what history shows.” Paul Tudor Jones. Here is a graphical depiction of that forward returns vs. P/E point.
So, while the UofM's US Consumer Confidence survey for April dropped to a record low (49.8) in its more than 70 year history, the Conference Board's survey advanced a third straight month.
Wheat just hit a 2-year high, fertilizer is collapsing, and the Iran war is now coming for the global food supply... Wheat futures just hit their highest level since 2024, up 28.3% year to date.
Americans have NEVER been this pessimistic about their finances: 55% of Americans say their financial situation is getting worse, up from 53% last year and 47% in 2024, the highest since Gallup began tracking in 2001. This is the 5th consecutive year that more Americans say their finances are worsening than improving, surpassing even the readings seen during the 2020 Crisis and the Great Financial Crisis The cost of living tops the list of financial concerns at 31%, while energy costs rose to 13% of mentions, up +10 percentage points YoY, the highest since 2008.
Healthcare. Consumer Staples. Utilities. The boring sectors. The "safe" ones. Right now they trade at a -35% discount to the S&P 500. That's the deepest discount in 45 years. Deeper than the dot-com bubble. Deeper than 2008. Everyone is crowded into tech.
DIMON SAYS EUROPE IS GRADUALLY APPROACHING A SERIOUS ISSUE.
Anyone who has really succeeded at investing and trading is first and foremost a great risk manager – Paul Tudor Jones
A busy day ahead - Canada interest rate decision, USA interest rate decision, Jerome Powell speech, Google earnings, Amazon earrings, Meta earnings, Microsoft earnings
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