Coal makes a comeback as the world thirsts for energy. From the U.S. to Europe to China, many of the world’s largest economies are increasing short-term coal purchases to ensure sufficient supplies of electricity, despite prior pledges by many countries to combat climate change. The push is being led by Europe, which is boosting coal purchases to keep power flowing to homes and factories after Russia cut gas supplies to the continent.
U.S. futures and European bonds drop on economic woes. Contracts on the S&P 500 and Nasdaq 100 dropped 0.7 percent each after the underlying indexes capped their 11th decline in 13 weeks. European stocks rose for the first time in four days as dip-buyers emerged. The dollar was marginally weaker at the start of the US Independence Day holiday. Read more here.
Tesla just had its best production month ever. June bounced back from Covid lows. The electric vehicle maker delivered 254,695 EVs in the second quarter of 2022. It is a drop of 18% compared with first-quarter deliveries of 310,048—and breaks a streak of eight consecutive quarterly records. But June was Tesla’s best month ever for production, according to a company news release.
Crypto lender Vauld pauses withdrawals as the market crash takes its toll. The crypto lender on Monday paused all withdrawals, trading, and deposits on its platform and is exploring potential restructuring options, the company said. Vauld said it is facing “financial challenges” due to “volatile market conditions” which has led to customers withdrawing more than $197.7 million from the platform since June 12.
Falling commodity prices raise hopes that inflation has peaked. Natural-gas prices closed the quarter 3.9% lower. U.S. crude slipped from highs above $120 a barrel to end at around $106. Wheat, corn, and soybeans all wound up cheaper than they were at the end of March. Cotton unraveled, losing more than a third of its price since early May. Benchmark prices for building materials copper and lumber dropped 22% and 31%, respectively. Read more here.
A glut of goods at Target and Walmart is a boon for liquidators. Liquidity Services Inc., Xcess Limited, B-Stock LLC, and other companies that help dispose of the oversupply said they are seeing a glut of kitchen appliances, televisions, outdoor furniture, and apparel that major chains are trying to clear out. Consumers curtailed purchases of travel and entertainment. At the same time, inflation is pushing up the costs of necessities.
WHAT TO WATCH
GPU sales for AMD/NVDA will not live up to expectations. When Ethereum moves to proof of stake there is no need for high-end GPUs to mine ETH for profits. Average customers usually buy a cheaper version at a discount versus buying the latest GPU. As ETH dropped to $1k, miners were likely losing money due to the high electricity costs. There has been a downtick in Ethereum hash rates in June as miners start to sell the GPU into the market. Read more here.
Oil prices show no signs of easing as China starts to reopen and supply worries persist. Commodity strategists expect a sharp contraction in Russian oil exports could trigger a full-blown 1980s-style oil crisis pushing Brent well past $150/barrel. Meanwhile, China’s economic reopening should also boost oil consumption and provide further upside to prices.
Oil prices could more than triple if Russia decides to cut output, says Goldman Sachs. The current price for a barrel of oil stands at around $110, but that could increase to $380 per barrel if Russia acts to cut output. Russia cutting production by 3 million barrels a day would push global prices to $190 per barrel. And the worst-case scenario would be if Moscow cut 5 million barrels per day, which could send the price to $380.
Singapore weighs new crypto safeguards as the industry stumbles. The Asian country is considering new rules to protect consumers after a series of high-profile crypto blowups, including firms based in the city-state. The Monetary Authority of Singapore has been considering additional consumer protection safeguards. These may include placing limits on retail participation, and rules on the use of leverage. Read more here.
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