- Team Biden doubts Zelenskyy’s counteroffensive (Any. Day. Now.)
- Jim Rickards: Jack Teixiera acted alone… Really?!
- JPM’s good bank vibes only
- Two “good” Big Tech earnings reports (AI wars)
- Tesla’s ultimate hypegirl… GPS: Beyond finding the closest McDonald’s… The cheapest Big Mac in America… And more!
“Fourteen months into the conflict, the Ukrainians have suffered staggering losses — around 100,000 casualties — with many of their top soldiers either sidelined or exhausted,” says an article at Politico.
“The troops have also gone through historic amounts of ammunition and weaponry with even the West’s prodigious output unable to match Zelenskyy’s urgent requests.”
The article continues: “Publicly, President Joe Biden’s team has offered unwavering support for Ukraine, pledging to load it up with weapons and economic aid for ‘as long as it takes.’”
Behind closed doors at the White House, however, it’s another story entirely.
“It doesn’t help America’s confidence that the war has slowed to a brutal slog,”Politico says bluntly.
At the same time, Team Biden’s coming to the realization that Ukraine is a bottomless money pit…
Omigod!
No, a massive Russian winter offensive never materialized (the winter was too mild for the ground to firm up for tanks), but Politico calls Ukraine’s attempt “to retake Russian-seized territory most likely in the east and south” an “ever-imminent counteroffensive.”
Meaning: Any. Day. Now.
“We’ve nearly completed the requests of what [Ukraine] said they needed for the counteroffensive as we have surged weapons and equipment to Ukraine over the past few months,” an anonymous administration official tells Politico.
As the weather improves — it’s fightin’ season — and if Ukraine can’t make some headway dislodging Russia from its territory, then NATO allies might force the U.S. to admit defeat. (And by defeat, we mean negotiate peace.)
“Those concerns recently spilled out into the open during a leak of classified information onto social media,” Politico adds.
“In the aftermath of the leak of TOP SECRET information, about the war in Ukraine, the FBI arrested a Massachusetts Air National Guardsman named Jack Teixeira and accused him of being the leaker,” says Paradigm’s macro expert and former CIA insider Jim Rickards.
“We’ll let justice take its course in that case,” he says.
“Still, it’s difficult to believe that Teixeira acted alone or even that he was the prime mover in this leak,” Jim adds.
“The information was the most sensitive… You can’t just roam around the intelligence archives at will,” he says, speaking from personal experience, as, at one time, having the highest-level clearance.
“Your ‘need to know’ is signed off by a security officer who looks at your background in relation to the information you are requesting and decides if your request is relevant.
“A low-level Air National Guardsman,” Jim emphasizes, would decidedly not have gotten clearance. “It seems likely that the information was passed to Teixeira by someone much higher up in the intelligence community.
“The ultimate source was probably a senior military official who knows Ukraine has lost the war,” says Jim.
“The contents of the leak make it clear that Ukraine is almost out of ammunition and is suffering a casualty ratio of seven Ukrainian soldiers killed to every one Russian killed… an impossible ratio to withstand much longer.
“The motivation would have been to clear the Pentagon of responsibility,” Jim says, “and point a finger at the warmongers in the State Department and White House, the parties most responsible for this fiasco.”
Alongside President Biden, he notes “that would include Victoria Nuland, Jake Sullivan, Tony Blinken and Susan Rice.” (By the way, Ms. Rice resigned from her position as Biden’s domestic policy adviser two days ago, effective in May.)
“Ukraine’s defeat is in sight,” Jim closes, “but the fighting inside the Beltway has just begun.”
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Based on two “good” Big Tech earnings reports (more on that later), it’s no surprise the Nasdaq is the only U.S. stock index in the green today. The tech-loving index, in fact, is up 0.70% to 11,885. On the other hand, the staid Dow has lost 0.50% to 33,355 while the S&P 500 is down 0.20% to 4,060.
Turning to commodities, oil’s down 1.5% to $75.93 for a barrel of West Texas Intermediate. Precious metals? Gold’s barely below the $2K mark at $1,997.50 per ounce, and silver is taking a breather at $24.88.
Checking in on crypto, Bitcoin’s having a rollicking day, up almost 8% to $29,725; Ethereum’s in on the crypto action, too: up 6% to $1,946.90.
The big economic number of the day is orders of durable goods — basically anything designed to last three years or longer. The headline number was boffo, up 3.2% in March, and way better than the +0.8% U.S. Census Bureau economists forecast.
But the headline number is always skewed by orders for aircraft and military hardware, which are highly volatile month-to-month. If you back out those numbers, you get the more revealing “core capital goods” figure. Here, Wall Street analysts were expecting a tiny tick up of 0.2%. Instead, it slumped to -0.4%.
Seeing as we talked about the not-over bank crisis yesterday, we highlight shares of Beverly Hills-based community bank PacWest Bancorp (PACW), which jumped 15% in pre-market trading… after the company reported Tuesday that deposits actually match accounting estimates. Imagine that! (At the time of writing, PACW shares are up about 12%.)
All this is in sharp contrast to the exsanguinating at First Republic Bank (FRC) — shares are down over 20% today.
But it’s good vibes only at JPMorgan’s equity desk, taking PacWest results to “seemingly” provide “more evidence that FRC is idiosyncratic.” Way to spin it, guys!
In more earnings news…
Two tech titans — Microsoft and Alphabet (Google) — announced earnings for the first three months of 2023.
Long story short, by the closing bell Tuesday, MSFT’s market cap clocked in at $2.05 trillion, making it the third-most valuable company in the world.
- Washington-based Microsoft (MSFT) raked in $52.9 billion in sales and $2.45 earnings per share, neatly exceeding analyst estimates of $51 billion and $2.24 respectively. Microsoft’s cloud computing unit remains its most profitable segment, bringing in $22.1 billion in revenue (versus $21.9 billion expected)
- Alphabet (Google) also reported a couple earnings beats with revenue coming in at $69.8 billion, opposed to $68.9 anticipated, and $1.17 earnings per share versus $1.07 wonks expected. On the downside, Google’s ad revenue declined 5% over the last three months from the quarter before.
Even though Google’s report was technically “good”… Was it really though?
“With fears of a recession building since last year, advertisers have been reeling in online marketing budgets, wreaking havoc on Google,” CNBC reports.
“In addition to the overall pullback in ad spending, YouTube” — owned by Google’s parent company Alphabet — “is also facing heightened competition from TikTok in short-form videos.”
Not to mention, in January, Google cut 6% of its workforce, and CFO Ruth Porat said on the company’s earnings call yesterday “the outlook remains uncertain,” adding that there will be more “multiyear” cuts ahead (real estate, employee services, etc.).
Playtime’s over?
And lest we forget the AI wars…
“ChatGPT launched with a bang in late November, landing its OpenAI parent a reported $10 billion investment from Microsoft in January,” says Forbes.
“Bard, Google’s answer to ChatGPT, has failed to impress investors to the same degree, with Goldman Sachs and JPMorgan analysts each declaring Microsoft has a clear ‘lead’ in the generative artificial intelligence space.
“Shares of Microsoft are up 15% since ChatGPT’s debut,” Forbes reinforces, “compared to a 9% gain for Alphabet.”
Once again, we remind you that Microsoft and Google are two of eight companies propping up the U.S. stock market this year. And here’s news about a third…
“Ark Invest’s Cathie Wood is back to her old tricks: Setting outrageous price targets for her darling innovation stocks,” says Paradigm market analyst Greg Guenthner.
“Tesla Inc. (TSLA) is the main target of her fantastic visions as she proclaims the electric car pioneer’s shares will top $2,000 by 2027.
“No, I didn’t accidentally tack an extra zero on a $200 price target,” he clarifies. “The ARKK boss is claiming that TSLA, a stock that is currently trading around $160, will rally more than 1,000% in the next four years.
“Wood estimates Tesla’s revolutionary ‘robotaxi’ fleet, with self-driving technology, would contribute $5–6 trillion in revenue by 2027,” says Greg. “The sheer size of this guess feels completely insane.”
Well, yeah. Perhaps that’s why the note — “ARK’s Expected Value for Tesla In 2027” — adds the following disclaimer: “FORECASTED PERFORMANCE RESULTS ARE HYPOTHETICAL AND HIGHLY SPECULATIVE, AND PRESENT MANY RISKS AND LIMITATIONS.”
Heh…
“Meanwhile, back in reality,” Greg continues, “Tesla shares are sliding, and ARKK is on the verge of breaking down… again.
“After multiple attempts at clearing $40, and its 200-day moving average, ARKK faltered last week and is extending lower.
“Shares tagged new one-month lows on Monday and appear to be on track for a test of $35.
“Don’t hold your breath hoping for a quick recovery here,” Greg summarizes. “That $40 wall is back after a failed breakout in February. If this thing loses $35, I think we’ll see new lows within a few weeks.”
Now, a new problem we hadn’t started thinking about yet…
A temporary GPS satellite outage underscores the soft underbelly of modern farming practices.
“The British satellite Inmarsat I-4 F1, which provides services for East Asia and the Pacific regions, is back in operation after an outage on Sunday,” says an article at Australia’s ABC Rural.
“In Australia, one of the consequences of the outage was some farmers using the service lost access to the GPS services used in precision farming for sowing crops, fertilizing and spraying.”
Source: Deere.com
Spokesman Chris Groves of the National Farmers’ Federation reckons over 60% of grain farmers seeding this week were stopped short by the outage.
“This is a pretty obvious weakness,” says Katie McRobert of The Australian Farm Institute. “People are completely reliant on the use of data and GPS and other similar technologies in farming to be more efficient, productive and sustainable.”
GPS: It’s for far more than just directions to get from place to place. Or to the nearest McDonald’s…
“Two All Beef Patties, Special Sauce, Lettuce, Cheese, Pickles, Onions on a Sesame Seed Bun.” So went the ubiquitous jingle for McDonald’s Big Mac…
A uniform price for the burger, however, is not at all ubiquitous.
According to the map — ranging from shades of orange (most expensive) to green (cheapest) — you can purchase the most affordable Big Mac ($3.49) in Stigler, Oklahoma. The priciest? In Lee, Massachusetts, for $8.09. (We’re not telling a whopper!)
It’s lunchtime as I write, and while I’m old enough to remember the Big Mac jingle (even jump-roping to it as a kid)… that also means I’m too old to be eating like that. Blerg.
Take care! The 5 will be back with another episode tomorrow..
Best regards,
Emily Clancy
The 5 Min. Forecast
