Zerohedge

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). 

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

*  *  *

You can support ZeroHedge by picking up a waxed canvas hat!

 

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.

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.

Nvidia CEO Jensen Huang warned Wednesday at the Hill and Valley Forum in Washington, D.C., that the U.S. and China are in a fierce, long-term AI supremacy race, while touting AI’s potential to transform industries and drive a trade jobs boom.

“China is right behind us,” Huang told CNBC’s Squawk on the Street after his forum appearance. “We’re very, very close.” The billionaire tech founder, whose company dominates the AI chip market, framed the competition as enduring. “This is a long-term, an infinite race,” he said. “In the world of life, there’s no two-minute drill or end of the quarter.” Huang’s comments underscore the high stakes of AI development as both nations channel vast resources into the transformative technology. “We’re going to compete for a long time,” he added.

Nvidia CEO Jensen Huang says China is right behind the U.S. in the AI race while at the Hill and Valley Forum. pic.twitter.com/XbVL5iQgFf

— Turpentine (@TurpentineMedia) April 30, 2025

At the forum, Huang, in conversation with Jacob Helberg, Under Secretary of State for Economic Growth, Energy, and the Environment nominee and forum co-founder, weighed in on AI’s impacted on manufacturing. “Every company that makes things today—whether lawnmowers or construction machinery—will shift from manual to autonomous or semi-autonomous systems,” he said. “When it becomes autonomous, it’ll be software-defined, and you’ll need factories to produce the AI that powers it.” Huang envisioned a dual industrial model: one factory building physical products, another generating the AI “tokens” that drive them.

NVIDIA CEO Jensen Huang explains to @jacobhelberg how every company with a physical factory will also operate an AI factory: pic.twitter.com/R8MyrPMEEP

— Turpentine (@TurpentineMedia) April 30, 2025

Huang also addressed AI’s impact on the labor market, predicting that the changes, though severe, will be a net-positive for society. “New jobs will be created, some jobs will be lost, every job will be changed,” he said, advocating a first-principles approach to avoid hyperbolic forecasts. He pointed to San Francisco’s revival as evidence of AI’s economic potency. “Just about everybody evacuated San Francisco. Now it’s thriving again—all because of AI,” he said. The technology is reshaping software development, moving from human-coded programs on CPUs to machine-learning-generated code on GPUs, spawning new roles in data curation and AI safety. “All of that technology is being invented right now, and it creates tons of jobs,” Huang noted.

The most lucrative opportunity, Huang argued, lies in “AI factories”—massive facilities converting electricity into computational intelligence. These complexes, he said, represent a new industrial frontier. “A one-gigawatt factory is $60 billion,” he said, roughly equivalent to Boeing Co.’s annual revenue. With plans for factories scaling to 7-10 gigawatts, their construction and operation promise an economic windfall, particularly for skilled trades.

Nvidia CEO Jensen Huang on how AI will transform the labor market and be a boon for tradecraft workers like electricians and plumbers: pic.twitter.com/9cYDbB1GU4

— Turpentine (@TurpentineMedia) April 30, 2025

“You need carpenters, steelworkers, masons, mechanical and electrical engineers, plumbers, and IT specialists,” Huang said, estimating a three-year construction cycle per factory. “A whole bunch of new trade jobs have to be created.”

China’s manufacturing activity in April saw its worst contraction since December 2023, exposing sharp signs of weakness in Asia’s biggest economy from the trade war with the US, and boosting calls for fresh Chinese stimulus, which is always “just around the corner” but never arrives.

In the aftermath of significantly higher US tariffs, China’s official NBS manufacturing PMI fell to 49.0 in April from 50.5 in March, much lower than consensus expectations, the lowest reading since May 2023. The non-manufacturing PMI, which includes services and construction, fell to 50.4 from 50.8 also missed expectations driven by weakness in both construction and services sectors, but remained above the 50-mark separating growth from contraction.

Separately, the unofficial Caixin manufacturing PMI also fell to 50.4 in April from 51.2 in March.

The reading contrasts with Chinese officials’ conviction that the world’s second-largest economy is well placed to absorb the U.S. trade shock and confirms that domestic demand remains weak as factory owners struggle to find alternative buyers overseas.

Here are the details:

1. The NBS manufacturing PMI headline index fell to 49.0 in April from 50.5 in March, the lowest reading since May 2023. Among major sub-indexes of NBS manufacturing PMI, the output sub-index fell to 49.8 from 52.6, the new orders sub-index declined to 49.2 from 51.8, and the employment sub-index fell to 47.9 from 48.2. The suppliers’ delivery times sub-index inched down to 50.2 in April from 50.3 in March. NBS commented that the output and new orders sub-indexes of textile and metal products were below 50 in April.
    
2. On the trade-related sub-indexes, the manufacturing new export order sub-index decreased notably to 44.7 in April (vs. 49.0 in March), the lowest reading since December 2022. The import sub-index fell to 43.4 in April (vs. 47.5 in March). Inventory and price sub-indexes showed inventory drawdowns and deflationary pressures. The raw material inventories sub-index edged down to 47.0 from 47.2, and the finished goods inventories sub-index decreased to 47.3 from 48.0. The input cost sub-index decreased sharply to 47.0 (vs. 49.8 in March). The output prices sub-index also fell to 44.8 (vs. 47.9 in March). Larger manufacturers appeared to show a bigger activity deceleration. By enterprise size, the PMI of large/medium/small enterprises fell to 49.2/48.8/48.7 from 51.2/49.9/49.6 in April, respectively.

   
    

3. The Caixin manufacturing PMI, which was released shortly after the NBS print, fell to 50.4 in April from 51.2 in March, amid a sharp fall in new export orders and overall factory activity slowing. Sub-indexes in the Caixin manufacturing PMI suggest a modest decline in the output sub-index in April (51.6 vs. 51.8 in March), a significant slowdown in new orders (50.5 vs. 52.1 in March), weaker employment (49.0 vs. 50.1 in March), and deflationary pressures in price indicators (input prices increased to 49.7 from 48.4 and output prices increased to 49.2 from 49.1). The new export orders sub-index fell sharply to 47.5 in April from 52.0, the lowest reading since July 2023, suggesting weaker external demand amid higher US tariffs. Surveyed companies noted that greater competition among vendors amid subdued demand for inputs led to a drop in input costs in April. Firms often shared cost savings with their customers, and lowered their selling prices accordingly.
4. The official non-manufacturing PMI (comprised of the services and construction sectors) fell to 50.4 in April (vs. 50.8 in March). The services PMI decreased to 50.1 (vs. 50.3 in March). According to the survey, the PMIs of air transportation, telecommunications, radio, insurance, television and satellite transmission services sectors were above 55 while the PMIs of water transportation and capital market services were below 50 in April. The construction PMI fell in April to 51.9 (vs. 53.4 in March). NBS noted that the growth of the infrastructure-related construction PMI rose to 60.9 in April from 54.5 in March.

Manufacturers had been front-loading outbound shipments in anticipation of the duties, but the arrival of the levies has called time on that strategy, putting pressure on policymakers – who had for the past year merely promised to do something instead of actually doing something – to finally address rebalancing the economy.

“The sharp drop in the PMIs likely overstates the impact of tariffs due to negative sentiment effects, but it still suggests that China’s economy is coming under pressure as external demand cools,” Zichun Huang, China Economist at Capital Economics, said. 

“Although the government is stepping up fiscal support, this is unlikely to fully offset the drag, and we expect the economy to expand just 3.5% this year.”

Huang added that negativity among the survey’s respondents “probably exaggerates the impact of the tariffs,” noting that “the new export orders index dropped back to its lowest level, COVID-19 disruptions aside, since April 2012.”

Trump’s decision to single Beijing out for import duties of 145% comes at a particularly difficult time for China, which is struggling with deflation due to sluggish income growth and a prolonged property crisis.

Beijing has largely relied on exports to shore up the fragile economic recovery since the end of the pandemic and only began to take steps to boost domestic demand more earnestly late last year. 

Zhao Qinghe, an NBS statistician, said the drop was largely down to “sharp changes in (China’s) external environment,” in a note accompanying the release. China’s yuan inched lower against the dollar following the data’s release, as the first data since Trump’s tariff announcement pointed to early signs of damage to the economy.

While China has repeatedly denied it is seeking to negotiate with the U.S. a way out of the tariffs, and appears to instead be betting that Washington makes the first move, continued economic deterioration will force Beijing’s hand. 

“We expect the manufacturing PMI to be in contraction in May, but it is expected to rise to about 49.5, driven by an increase in stable growth policies,” said Wang Qing, chief macro analyst at Oriental Jincheng.

He said further cuts to interest rates and the amount commercial banks must hold in reserve may be needed as conditions worsen. On Monday, the vice head of China’s state planner said the National Development and Reform Commission (NDRC) would roll out new policies over the second quarter in line with the prevailing economic conditions of the time.

That followed pledges by the Communist Party’s elite decision-making body, the Politburo, on Friday to support firms and workers most affected by the duties. The general consensus among China observers is a second trade war with the U.S. will significantly weigh on growth, but the NDRC’s Zhao Chenxin said he was confident the country would achieve its 2025 economic growth target of around 5%.

The International Monetary Fund, Goldman Sachs and UBS all recently revised down their economic growth forecasts for China over 2025 and into 2026, citing the impact of U.S. tariffs – none of them expect the economy to hit Beijing’s official growth target.

Kilmar Abrego Garcia, the ‘wrongly deported Maryland Dad’ that Democrats dropped everything to defend, was accused of being a gang member in a 2018 sworn affidavit by the father of his wife’s children.

“She is dating a gang member,” wrote Edwin Trejo Ramos of his ex, Jennifer Vasquez Sura in an affidavit filed in Prince George’s County Circuit Court in Maryland seeking an emergency court hearing to obtain custody of the couple’s two children. 

“She try to kill herself and she left the kids with 11 year [old] to take care of them. And I’m afraid my kids lives are in danger because she is dating a gang member,” reads the sworn affidavit, which was ultimately denied by a judge and later dismissed in 2019 over jurisdictional issues.

NEW: We @nypost have obtained court docs from 2018 showing
Kilmar Abrego Garcia was being accused of gang membership by his wife’s ex and the father of two of her kids.

“She is dating a gang member,” Jennifer Vasquez Sura’s ex, Edwin Trejo Ramos alleged in a petition filed in… pic.twitter.com/2Vg1gTYGUf

— Jennie Taer 🎗️ (@JennieSTaer) April 29, 2025

 According to the NY Post;

Abrego Garcia and Sura — a US citizen — met in 2016, according to NBC News. The couple moved in together in 2018, and in June 2019, they got married while Abrego Garcia was being held in an immigration center, standing on opposite sides of a security glass wall. Sura gave birth to their son a few months later.

The timeline of Abrego Garcia and Sura’s relationship suggests the claim in the petition referred to Abrego Garcia.

Three years later, Vasquez Sura applied for a protective order against Abrego Garcia, claiming that he punched, scratched and grabbed her – leaving her with bruises and bleeding.

Abrego Garcia, an El Salvadorian national, was illegally residing in the United States when he was arrested and deported to El Salvador in March due to what US authorities claim was a “prominent role” in the MS-13 gang.

While an immigration judge had previously ruled that there was strong evidence the man was a member of MS-13, a different judge issued a withholding of removal – preventing his deportation to his home country over concerns that he would not be safe there.

The US government subsequently admitted that the deportation was due to an administrative error.

On April 10, the US Supreme Court ruled that the government must “facilitate” the release of Garcia from El Salvadorian custody, and make sure his case “is handled as it would have been had he not been improperly sent to El Salvador.”

Since then, we’ve learned that Abrego Garcia was suspected by a Tennessee state trooper of human trafficking in 2022 after he was pulled over for driving erratically in a black 2001 Chevrolet Suburban – owned by another individual, full of people – and that the SUV was owned by a man who was himself deported after pleading guilty to smuggling illegal aliens in 2020.

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.

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.

In our preview of today’s quarterly refunding announcement we said to focus on three things: i) when will Treasury hike coupon sizes again, ii) if there will be any change to the language holding auction sizes steady for “at least” the next several quarters, and iii) will Bessent change the Treasury buyback program to a more activist exercise (similar to what Yellen did with her Activist Treasury Issuance strategy which boosted markets for 2 years as reverse repo drained).  In retrospect, there were no big surprises, and in line with our forecast for $370BN in May gross offering, and $125BN in 3/10/30 quarterly refunding auctions…

… the Treasury announced just that, revealing a $125BN refunding calendar, made up of the following:

• $58 billion of 3-year notes on May 5
• $42 billion of 10-year notes on May 6
• $25 billion of 30-year bonds on May 8

The refunding will raise new cash of about $30.8 billion. The balance of Treasury financing requirements over the quarter will be met with regular weekly bill auctions, cash management bills (CMBs), and monthly note, bond, Treasury Inflation-Protected Securities (TIPS), and 2-year Floating Rate Note (FRN) auctions, or visually:

The table above is a carbon copy of the one we laid out on Monday, so again, no surprises here at all.

With regard to TIPS, Treasury detailed the following adjustments for the February to April period:

• To increase the June 5-year TIPS reopening by $1 billion
• Boost the July 10-year TIPS new issue by $1 billion

More importantly there were no surprises in the Treasury’s forward guidance put in place iin January of 2024, as it kepts is language unchanged saying the “Treasury believes its current auction sizes leave it well positioned to address potential changes to the fiscal outlook and to the pace and duration of future SOMA redemptions. Based on current projected borrowing needs, Treasury anticipates maintaining nominal coupon and FRN auction sizes for at least the next several quarters.“

Dealers had expected that the Treasury would avoid ramping up longer-dated securities sales for now, in the face of a raft of uncertainties along with the constraint of the debt limit. Since the start of this year, the debt ceiling has left debt managers unable to boost the overall net supply of Treasuries, forcing them to deploy cash reserves and so-called special accounting measures to make good on payment obligations.

“The Treasury is in wait-and-see mode when it comes to debt management,” Santander economist Stephen Stanley wrote in a note ahead of the announcement. “The fiscal outlook is highly uncertain, with a huge tax-and-spending package making its way through Congress over the next few months,” and it’s not yet clear whether federal revenue will ramp up off the back of tariff hikes, or get hurt by an economic downturn, he said.

Stanley, along with many dealers, estimated that the Treasury wouldn’t need to resume boosting the size of note and bond auctions again until early 2026; of course, as a result of outsized fiscal deficits – which everyone agrees have to be slashed but everyone refuses to start doing it now – which are running at $2 trillion a year, mean most analysts see an increase as inevitable at some point.

Separately, some dealers had been on the lookout for any hints that Bessent may be leaning towards boosting the share of bills over time – setting aside past criticism of Yellen for doing just that. In response, the Treasury clarified that “until the debt limit is suspended or increased, debt limit-related constraints will lead to greater-than-normal variability in benchmark bill issuance and significant usage of CMBs” which was also expected. That question is what happens after the debt ceiling deal is reached some time in the late summer.

Turning to the big wildcard in today’s announcement, the expectations that Treasury Buybacks may be used more actively while the dormant Fed wakes up to stabilize the bond market, the Treasury advised that it’s “evaluating potential enhancements to its buyback program to better achieve its liquidity support and cash management goals.” As we noted previously, the surprising change comes after Treasury Secretary Scott Bessent earlier this month flagged that “we could up the buybacks” in case needed to address any tumult in the Treasuries market.

Specifically, this is what the Treasury said as it evaluates supplanting the Fed’s missing QT with treasury buybacks:

Given the success of the buyback program since its launch last year, Treasury believes it is an appropriate time to consider ways to improve its efficacy.  Accordingly, Treasury will evaluate a broad range of possible enhancements such as: changes to maximum purchase amounts, buyback operation scheduling and frequency, security eligibility, maturity bucket composition, execution process, and counterparty eligibility.  In considering these options, Treasury will be guided by the objective of financing the government at the lowest cost over time.  Treasury is committed to engaging with a wide range of market participants, including the primary dealers and Treasury Borrowing Advisory Committee, to assess these potential enhancements to the buyback program.

US debt managers will be looking at potential changes to the maximum purchase amounts of their buybacks, along with the frequency of the operations and other details. The current buyback program kicked off last year, and is aimed at improving the liquidity of older securities along with helping smooth out the Treasury’s management of cash.

The Treasury also released its latest buyback schedule for the upcoming refunding quarter.  As the schedule indicates, Treasury plans to conduct weekly liquidity support buybacks of up to $4 billion per operation in nominal coupon securities.  In longer-maturity buckets, Treasury plans to conduct two operations, each up to $2 billion, over the refunding quarter.  Treasury also plans to conduct two operations, each up to $500 million, in each of the TIPS buckets.

Turning to the next potential political scandal, namely the debt limit, the Treasury said that it has been using extraordinary measures to finance the government on a temporary basis.  “The period of time that cash and extraordinary measures may last is subject to considerable uncertainty due to a variety of factors, including the unpredictability of tax receipts and the normal challenges of forecasting the payments and receipts of the U.S. government months into the future. Given this unavoidable uncertainty, Treasury is not able at this time to provide an estimate of how long its cash and extraordinary measures may last. We expect to provide an update during the first half of May after the majority of receipts from the April income tax filing season have been received.”

Perhaps the most stunning development is that the department has questioned dealers on the potential bill demand from stablecoins, in one possible indication officials are contemplating a structural change in the market. The minutes of a meeting of the Treasury Borrowing Advisory Committee, a panel of the most important bond market participants in the US, said that “dealers agreed that the digital asset space was important to monitor on an ongoing basis as a potential source of Treasury demand.”  Here is the section at hand:

With the growth of the cryptocurrency and digital asset economy has come the expansion of the “stablecoin” market in the United States and abroad. As this asset class continues to grow, the distinctions between money funds and payment stablecoins has continued to converge. Some stablecoins are moving towards paying interest, money market funds are exploring tokenization, and Congress is considering explicitly defining what constitutes a collateralized dollar-backed payment stablecoin. Please articulate the terminal effects of interest-bearing stablecoins from a perspective of Treasury demand, USD hegemony, the expansion of dollar-backed payment stablecoins, and potential effects for insured depository institutions. Further, do tokenized money funds present a risk should they be allowed to compete with other payment or settlement instruments?

And the most notable highlight from the presentation: “Rapid growth in stablecoins, as well as market volatility, could lead to a materially heightened demand for or supply in USTs, with an implied incremental demand of ~$900bn for T-Bills.”

Some more slides from the stablecoin presentation:

The full stablecoin presentation is below (pdf link)

Much more in the full Refunding statement.