"'Bloodbath': Analysts react to Asian shares sinking on tech selloff"

And Korea's market was closed on Friday. It's a pretty big deal.

From Reuters, July 17:

Asian markets slid sharply on Friday, with equity benchmarks in Japan and Taiwan falling as much as 6%, as a global rout in technology stocks accelerated.

 

Japan's benchmark Nikkei 225 gauge confirmed correction territory, down more than 10% since its all-time high close on June 25.

 

TAKAMASA IKEDA, SENIOR PORTFOLIO MANAGER, GCI ASSET MANAGEMENT, TOKYO:  

"The Nikkei is highly correlated with the SOX ​index. The pace of the SOX's gain was unsustainable, and there's been a correction in it. A correction was anticipated, but it is happening earlier than ‌market expectations."

"The market has become wary of whether hyperscalers can make returns that justify their massive investments. And these investments are funded by highly leveraged loans from banks and private lenders." 

CHRISTOPHER FORBES, HEAD OF ASIA AND MIDDLE EAST, CMC MARKETS, SINGAPORE: 

"They were good (tech) earnings. But it just shows how much was baked into the price. SpaceX is a pretty good proxy for market sentiment right now, and it's below the IPO price."

"I'm still not ​seeing any panic — people are buying gold and silver and those have been losing trades."

 

"But the reality is that the world is watching yields go higher...hence the market is ​selling off."

JOHAN JAVEUS, SENIOR ECONOMIST, SEB, STOCKHOLM: 

"Probably a combination of factors where the selloff is partly driven by profit-taking on many AI stocks, coupled ⁠with the recurring doubts of an AI investment bubble. The fact that the SpaceX IPO has done so poorly makes many investors extra nervous."

KEI OKAMURA, PORTFOLIO MANAGER, NEUBERGER BERMAN, TOKYO 

"I think ​the Fed was likely a trigger. Kevin Warsh and his comments and changing views towards what appears to be quite hawkish Fed policy started a cascading effect towards taking chips off the table."

 

"We ​started to get a lot more momentum in terms of the selling pressure, first off with the very high profile names like SK Hynix and Samsung, but from there it has kind of spread."

"So the Nikkei is trending as bad, if not a little bit worse. The word 'bloodbath' is accurate because it is across the board."

FABIEN YIP, MARKET ANALYST, IG, SYDNEY:

"I think the focus now from investors is about the sustainability, not just whether ​the growth numbers will go up... but more about whether these numbers are achievable while still maintaining certain healthiness in the balance sheet."

 

"Retail investors have borrowed to trade in this really ​impressive AI rally, so I think the unwinding of leveraged positions will definitely exaggerate the decline as well."

"If tonight, the selloff continues into the U.S. session, I think Korea, when it reopens, is going to be ‌quite disastrous."....

....MUCH MORE 

Capital Markets: "War and Tech Slump Weigh on Sentiment"

 From Marc Chandler at Bannockburn Global Forex:

There are two major concerns that are spurring risk off ahead of the weekend. First, the Middle East war is escalating, and there does not seem to be a near-term off-ramp. Second, the rout in technology stocks is rippling through the equity markets, and sharp losses in many Asia Pacific equity markets have been recorded today and the Nasdaq is poised to gap dramatically lower. 

The US dollar is mixed but mostly firmer and it looks poised to finish the week on a firm note. Japan’s finance minister threatened to take “decisive action” if necessary, but the yen failed to respond. The yen is weakest for the fourth week in the past five, though volatility is low. The UK will have a new prime minister on Monday, and the prospect of a market-friendly Chancellor of the Exchequer has spurred a Gilt rally, the same was thought of the current Chancellor a couple of years ago....

....MUCH MORE  

"Airbus migrating 70 critical apps from AWS to France's Scaleway amid digital sovereignty push"

From The Register, July 17:

Total of 900 applications including ERP, CRM, and manufacturing systems going to be kept 'under European control' 

Airbus is migrating its most critical applications for sensitive workloads from AWS to French cloud provider Scaleway's under a drive to increase digital sovereignty. 

As exclusively revealed by The Register in December, the European-based aerospace manufacturer, said it needed to guarantee the data remained “under European control" and was launching a tender at the start of 2026. 

Catherine Jestin, head of digital at Airbus, told us on Thursday: "The selection of Scaleway is a combination of a very strong technical answer and a very strong commercial offer making it competitive compared to hyperscalers' public cloud offerings. In addition, Scaleway is committed to involving Airbus in the definition of its future product roadmap."

"The objective is to host Airbus's most critical applications (those required for the Minimum Viable Company). This represents 900 applications and we will start with 70 of them today hosted on AWS." 

Applications being sent to Scaleway include ERP, manufacturing execution systems, CRM, and product lifecycle management. Finding a cloud provider to host its most sensitive applications for defense and industrial workloads was not a certainty when the process began, Airbus told us last year, because European cloud providers do not have the scale of their US rivals. 

Jestin said Airbus will continue to work with AWS. Skywise, a platform that aggregates and analyzes aviation data, and Case Management Assistant for customers' technical queries will continue to be hosted by AWS. 

In a statement, she said: “By integrating a trusted, high performance, cloud environment that keeps our critical data assets shielded from foreign extraterritorial laws, we are ensuring that our digital infrastructure keeps pace with our aerospace innovation, while maintaining control and resilience of our industrial operations.” 

Since President Donald Trump came to power for a second term, his antagonistic approach to allies - some of them now former allies - has created economic and geopolitical tensions between the US and Europe. 

This has heightened concern about the US Cloud Act, which allows the American government to request data held in overseas datacenters owned by US businesses, and only served to reinforce calls for digital sovereignty....

....MORE, plus previous articles. 

Here at the Sun King Group we're all for French sovereign AI, France was one of the first major markets to which Nvidia made the sovereignty pitch:

December 2023 - Nvidia CEO Jensen Huang Says AI to See ‘Major Second Wave (NVDA)

AI to See ‘Major Second Wave,’ NVIDIA CEO Says in Fireside Chat With iliad Group Exec
NVIDIA’s Jensen Huang says sovereign AI a growing need for countries to reflect unique cultural, linguistic, industrial characteristics
European startups will get a massive boost from a new generation of AI infrastructure, NVIDIA founder and CEO Jensen Huang said Friday in a fireside chat with iliad Group Deputy CEO Aude Durand — and it’s coming just in time.

February 2024 - "Nvidia chief sees rise of ‘sovereign AI’ infrastructure across nations, driving demand for company’s advanced chips" 

March 2024 - Here's Nvidia's "Sovereign AI" Pitch (NVDA)

June 2024 - France's "Mistral AI warns of lack of data centres and training capacity in Europe"  

October 2024 - "Parlez-vous AI? Francophone scholars warn against English language dominating AI"  

January 2025 - "Jensen Huang Wants to Make AI the New World Infrastructure" (NVDA)

This sovereign AI you speak of, I have heard of it.  

I have heard wondrous tales of immense wealth,

Of amazing deeds performed as if by magic.
Yes I have heard of all of this...*

February 2026 - French Tech: "Mistral CEO Arthur Mensch’s $1.4B Data Center Push Powers Europe’s A.I. Autonomy"

May 2026 - "Europe built sovereign clouds to escape US control. Then forgot about the processors"

May 2026 -  FrenchTech: "Mistral AI's CEO says Europe has 2 years to stop becoming America's AI 'vassal state'"

And many more, albeit with a few diversions: 

.... This is terrible. I now have Jensen Huang speaking in Dr. Martin Luther King's cadences as he repurposes the penultimate paragraph of "I have a Dream":

Let AI ring from Stone Mountain of Georgia.
Let AI ring from Lookout Mountain of Tennessee.
Let AI ring from every hill and molehill of Mississippi.
From every mountainside, let AI ring. 

I may have to go lie down.

 

March 6

...Every, town, every village, every hamlet, every wide spot in the road, should have their own (NVDA-powered) supercomputer.

"Germany's industrial order books swell to record high in May"

This may be due to Germany taking a page from the American playbook: issue lots of debt, buy stuff that blows up (armaments), repeat. 

From Reuters, July 17:

Germany's industrial order backlog rose to a record high in May, the statistics office said on Friday, highlighting ​strong demand for a manufacturing sector that has endured ‌a prolonged downturn.

The backlog of outstanding orders grew by 1.7% in May compared with the previous month, the office said, the sharpest increase since ​September 2021, when there were catch-up effects due to ​the COVID-19 pandemic.

 

As a result, order books are the ⁠fullest since the data series began in 2015.

However, Bethmann HAL ​bank chief economist Alexander Krueger warned that high order levels ​are only valuable if they translate into actual production.

 

German industrial production rose more than expected in May, according to the statistics office, while S&P Global's manufacturing PMI ​data for June showed output ticking up for a sixth ​straight month.

 

"Despite the governing coalition's reform package, companies are likely to remain cautious ‌in ⁠this regard," said Krueger, citing challenging business conditions and higher energy costs.

Many companies are also increasingly shifting production abroad rather than keeping it in Germany, he said.

 

"Orders are also likely to continue ​piling up for ​the time ⁠being, partly due to renewed tensions in the Middle East," he said. "Supply bottlenecks are hampering production."....

....MORE 

"Tokyo, Taipei lead heavy losses as Asian markets suffer fresh tech rout"

A whole lotta plungin' goin' on.

From AFP via Yahoo Singapore, July 17:

Tokyo and Taipei led losses on a glum day for Asian markets Friday, with tech firms once again in the crosshairs as investors cash in following this year's breathtaking rally.

The AI boom has sent technology valuations soaring to record levels as traders looked to get a slice of the next big thing while firms splashed out enormous amounts of money in investment.

But questions have been raised in recent months about whether valuations have gone too far and when companies will actually see any returns.

Worries about the AI trade have hammered the value of chip firms, with the Philadelphia Semiconductor Index losing about 19 percent from a June peak, according to Bloomberg.

Asian markets have been hammered, with Seoul's Kospi bearing the brunt of the selling, having more than doubled in the first six months of the year before losing about a third of its value since hitting a record in June.

But with South Korea enjoying a holiday on Friday, Tokyo and Taipei -- which are also heavily weighted toward tech -- were at the forefront of the selling.

Japan's Nikkei sank six percent with Advantest, Tokyo Electron and tech investment titan SoftBank losing more than 10 percent. 

Chipmaker Kioxia collapsed 16 percent, meaning it has lost more than half its value since hitting a record high and becoming the country's biggest firm by market capitalisation last month. 

Taiwan's Taiex also shed more than five percent as chipmaker TSMC retreated around the same amount a day after announcing record second-quarter profit and that it would invest a further $100 billion in the US state of Arizona.

There were also steep losses in Hong Kong, Shanghai, Singapore, Sydney and Bangkok, though Manila and Mumbai rose....

....MUCH MORE 

Moody's: U.S. Disengagement From Europe's Security Affairs Is Credit Negative For European Sovereign Ratings

From Reuters, July 13:

US' NATO shift negative for Europe's sovereign ratings - Moody's 

Progressive U.S. disengagement from European security ​affairs is negative for ‌Europe’s sovereign credit ratings, Moody’s said on Monday, due the ​increased defence costs ​the region’s governments will now ⁠face.

A summit of the ​North Atlantic Treaty Organisation (NATO)) ​in Turkey last week saw its 32 member countries agree to ​shift the balance ​of responsibility for Europe’s defence to ‌the ⁠alliance’s European members, and away from the United States.

“The (U.S.) disengagement is credit negative ​for ​European ⁠sovereigns,” a report by two of Moody’s ​top rating analysts ​said. ⁠It said the “credit effect” would depend on how the ⁠shift ​was managed ​in the coming years.

Speaking of white guys, here's everyone's favorite albino rocker with "Free Ride (take it easy)":

Drought Severity Continues Slow Improvement

Our area of interest is the agricultural land on either side of the Mississippi river from Canada to the ¿Golfo de América? Roughly from the 100th meridian in the west to a north - south line on Indiana's eastern border (the "First Principal Meridian"), approximately longitude 84° 48′ 50″ west.

 

From the University of Nebraska-Lincoln, July 16:

June 2, 2026:

 

July 14, 2026 (current):

  

Over the period the experimental Drought Severity and Coverage Index (DSCI) has improved from 189 to 153. It was at 156 last week.

"'We Must Act Now': Sixteen Nobel Laureates Join Leading Economists and AI Researchers in Call to Prepare for AI’s Economic Transformation"

Lifted in toto from the Stanford Digital Economy Lab, July 13:

New statement warns that AI could drive an economic transformation larger than the Industrial Revolution — on a vastly shorter timeline — and urges economists, policymakers, and technology leaders to prepare. 

Today, a group of leading economists and AI researchers, including sixteen Nobel Laureates, released “We Must Act Now: A Statement on AI’s Transformation of the Economy,” calling for urgent preparation for the economic impacts of radically more powerful AI.

The statement, organized by economists Erik Brynjolfsson, Ajay Agrawal, Anton Korinek, and Tom Cunningham, warns that increasingly capable AI systems could reshape the economy at unprecedented speed. While AI offers enormous opportunities to improve productivity and living standards, it also raises important questions for workers, firms, and public institutions.

The statement calls on economists, policymakers, and technology leaders to deepen research on AI’s economic impacts and to begin building the policies and institutions needed to ensure AI complements human capabilities and benefits society.

“AI capabilities are advancing far faster than our understanding of the economic implications. In that gap lie the greatest opportunities of our era. We must act now to guide AI to complement humans rather than simply imitate them — and to generate prosperity for the many, not just the few,” said Erik Brynjolfsson, the Jerry Yang and Akiko Yamazaki Professor at Stanford University and Director of the Stanford Digital Economy Lab.

“The scale, scope, and speed of the advances in AI, combined with a high level of uncertainty about the magnitude and timing of the impacts across many parts of the economy, call for an ‘all hands on deck’ approach to steering AI in beneficial directions,” said Michael Spence, Nobel Laureate and Professor Emeritus at New York University.

“I’m so happy to join other leading experts in calling for the urgent need to redirect AI so that its risks are minimized and it can work for the benefit of workers and society,” said Daron Acemoglu, Nobel Laureate and Institute Professor at MIT.

“Steam, electricity, and computers each gave societies decades to adapt; AI may give us only a few years. We cannot improvise our strategy and institutions in the middle of the transformation; waiting for certainty means arriving too late,” said Anton Korinek, Professor at the University of Virginia, currently on leave at Anthropic.

“Whether rapidly advancing AI broadly elevates global living standards or severely concentrates wealth is not predetermined; it depends on how we choose to re-architect our political and economic systems today. We cannot afford to wait for the full transformation to arrive and in the meantime rely on institutional scaffolding that was optimized for a pre-high-fidelity-prediction world,” said Ajay Agrawal, Professor at the University of Toronto’s Rotman School of Management.

“We are driving in the fog, and it is extraordinarily difficult to anticipate what will happen next. It’s the right time for a coordinated effort to bring clarity to a confusing situation.” said Tom Cunningham, Researcher at METR.

The statement has been signed by more than 200 economists and AI researchers from leading universities and AI research organizations around the world. The full statement and the current list of signatories are available at http://wemustactnow.ai/.

As with most of these things, climate, nuclear energy etc. the important/valuable information is not how many people sign something, that's just politics, but rather which of the signers has the most accurate intuition/insight into what is coming.

And that, unlike the political aspect, takes some effort to glean from the mass of names. 

"JPMorgan shifts focus from Hormuz oil chokepoint to Russian refining crisis"

From CryptoBriefing, July 15:

Wall Street's biggest bank says Russian refinery disruptions now pose a greater threat to global oil markets than Strait of Hormuz tensions  

For months, the oil market’s boogeyman was the Strait of Hormuz, that narrow waterway where roughly a fifth of the world’s oil supply squeezes through. JPMorgan has now decided there’s a bigger problem.

The bank’s analysts published a note on July 10 redirecting their focus from Hormuz transit risks to the deteriorating state of Russian refining capacity. Russian refinery runs have dropped to approximately 3.6 million barrels per day, nearly 40% below pre-war levels.

From chokepoints to crackdowns 
JPMorgan had previously warned that sustained disruptions at the Strait of Hormuz could send oil prices to $120 to $150 per barrel. That scenario hasn’t disappeared, but it’s been eclipsed by the systematic degradation of Russian refining infrastructure.

Ukrainian drone strikes, which intensified beginning in March 2026, have hammered Russian refineries with surprising effectiveness. Hormuz represents a potential disruption. Russian refining losses are an actual, measurable supply deficit that’s already reshaping global product markets.
What 40% looks like in practice

A 40% decline in Russian refinery output is staggering when you consider Russia’s role in global energy markets. Before the conflict escalated, Russia was one of the world’s largest refined product exporters, shipping diesel, fuel oil, and other products across Europe, Asia, and beyond.

Losing that much refining capacity doesn’t just affect crude oil prices. It creates a bottleneck further down the supply chain. Crude can still flow, but the facilities needed to turn it into usable fuel are offline. Diesel prices, jet fuel costs, and petrochemical feedstock availability all get squeezed.

The timing also complicates matters for OPEC+, which has been carefully managing production cuts to support prices. If Russian refining stays impaired, the cartel faces a dilemma: increase crude output to compensate for lost products, or hold steady and watch refined product prices climb further.

The macro ripple effects... 

....MORE 

Related:

July 12 - The World Runs On Diesel and Diesel Is Running out

With Russian shipping and refining capacity getting whacked we're seeing crack spreads greater than the price of crude itself.

July 15 - "Ukraine’s Drone War Just Showed Up in the Price of Bread — European Wheat Futures Jumped 4% in a Week"

International Energy Agency: China's Rare Earth Curbs Could Endanger $6.5 Trillion Of Western industry

From Reuters, July 15: 

The full implementation of China's rare earth export restrictions could put $6.5 trillion of downstream production outside the country at risk, the International ​Energy Agency warned on Thursday.

 

China, the world's largest producer of ‌rare earths, expanded export controls in October last year to cover additional materials and introduced new licensing requirements, but later agreed to delay implementation for a year.

 

Rare earths are a group ​of 17 metals used in small quantities, but essential to products ​ranging from cars and aircraft to electronics and weapons systems.

 

If ⁠the controls take full effect, about $6.5 trillion of production across the automotive, ​high-tech, defence and energy sectors could be exposed to supply disruptions, the ​IEA said in its Global Critical Minerals Outlook report.

 

The U.S. and Europe would account for nearly half of the economic impact, the report added. 

"Our latest analysis shows that vast ​amounts of economic value depend on relatively small volumes of critical minerals, ​whose supply chains remain highly concentrated and are therefore vulnerable," IEA Executive Director Fatih Birol ‌said....

....MUCH MORE 

 

And at the IEA, the press release with link to the 373 page PDF:

Supply concentration, export restrictions and declining investment put critical mineral security at risk

"EU accuses China of seeking to reshape global order in stark new strategy paper"

From the South China Morning Post, July 16:

China trying to ‘reshape the global order in line with their interests’, EU says in some of bloc’s strongest official criticism of Beijing

The European Union has accused China – along with Russia – of trying to “reshape the global order in line with their interests” and “fostering a return to a sphere-of-influence logic”, in an explosive new position paper that contains some of the bloc’s strongest ever official criticism of Beijing.

The paper, which was adopted by the EU’s 27 foreign ministers on Monday without any announcement, accuses Beijing of being both a “key enabler” and “crucial enabler” of Russia’s war on Ukraine, language previously used by Nato.

In stark terms, the paper casts Russia and China as the two principal revisionist powers challenging European security and the international rules-based order.

“At the centre of this transformation lies the determination of some powers, Russia and China foremost among them, to establish regional dominance and reshape the global order in line with their interests, fostering a return to a sphere-of-influence logic,” read the document, which was written by the EU’s External Action Service – its de facto foreign office – as guidance for the bloc’s first security strategy, expected later this year....

....MUCH MORE 

"Uber reaches deal for $14.8 billion takeover of Delivery Hero" (DHER.DE; UBER)

From the Wall Street Journal via MSN, July 16:

Uber Technologies agreed to acquire Germany’s Delivery Hero in a deal that values the German food-delivery company at $14.8 billion and seeks to strengthen the U.S. tech company’s footprint in international markets.

The San Francisco-based company said Thursday that it entered into a combination agreement with Delivery Hero under which it will offer 41.50 euros a share in cash.

Delivery Hero shares closed at 38.18 euros on Wednesday.

"China memory giant CXMT valued at US$85 billion in record Shanghai IPO"

Two from the South China Morning Post. First up, the headliner, July 15:

Chinese DRAM maker is set to raise 57.9 billion yuan (US$8.5 billion), nearly twice the amount earmarked for its investment projects 

China’s leading memory chipmaker, ChangXin Memory Technologies (CXMT), has priced its Shanghai initial public offering at 8.66 yuan (US$1.28) apiece, positioning the company for the largest listing by a Chinese semiconductor company on a mainland bourse.

The firm, based in Hefei, Anhui province, is expected to raise gross proceeds of 57.9 billion yuan (US$8.5 billion) from the sale of nearly 6.7 billion shares, according to an offering announcement released on Tuesday.

The shares represent 10 per cent of the company’s enlarged capital, giving CXMT an implied valuation of 579 billion yuan (US$85.2 billion) upon listing on Shanghai’s Star Market.

If a 15 per cent overallotment option is fully exercised, the offering could expand to 7.7 billion shares and raise up to 66.6 billion yuan (US$9.83 billion).

Online and offline subscriptions will take place on Thursday, but CXMT has not yet announced a trading debut date.

The fundraising haul is nearly double the 29.5 billion yuan that CXMT had earmarked for investment projects in its prospectus, and the offering is set to surpass the 2020 Shanghai listing of Semiconductor Manufacturing International Corporation, which raised 53.23 billion yuan. That makes CXMT’s deal the largest A-share IPO by a Chinese chip company.

According to the announcement, CXMT is valued at 308.92 times its 2025 earnings, far above the 33.62 times for Samsung Electronics and 30.64 times for SK Hynix....

....MUCH MORE 

And July 13: 

Meet CXMT’s Zhu Yiming: the engineer building China’s answer to global memory-chip giants 
From a Silicon Valley garage to China’s largest DRAM maker and a US$4.4 billion IPO, Zhu reportedly refused pay until CXMT became profitable

....MUCH MORE

"AI cloud company CoreWeave explores Wall Street playbook to hedge memory-chip price risk" (CRWV)

From Reuters, July 14:

• CoreWeave has not executed any hedges and discussions remain at an early stage, the source said
• Long-term deals with Micron and Sandisk guarantee price floors for DRAM and storage ​chips
• SK Hynix and Micron expect fully ramped new manufacturing capacity in early 2028

AI cloud computing company CoreWeave is exploring the use of financial derivatives as a potential hedge against a future drop in memory and storage chip prices, according to a ​person familiar with the matter.

The unusual move underscores how deeply the AI boom ​has entangled cloud providers with the volatile chip market. To lock in ⁠supply amid soaring demand, thanks to a surge in AI infrastructure construction, cloud operators ​including CoreWeave have signed long-term agreements with memory and storage makers such as Micron and SanDisk.

 

Many ​of these deals guarantee suppliers a price floor for dynamic random access memory (DRAM) and storage chips.

But the arrangement cuts both ways: it protects chipmakers from a downturn, but leaves cloud companies like CoreWeave exposed if ​prices fall and they are stuck paying well above the going rate.

 

As a result, CoreWeave ​executives have held discussions about ways to hedge against a slide in memory chip stocks that would ‌occur ⁠if prices drop in the future, the source said....

....MORE 

"Ukraine’s Drone War Just Showed Up in the Price of Bread — European Wheat Futures Jumped 4% in a Week"

It's more than 4% in the U.S., chart below story.

From National Security Journal, July 15:

Ukraine’s nine-day, 116-vessel campaign has pushed Euronext wheat prices up 4% as the world’s top wheat exporter reroutes grain off the Azov. A Russian source says burning grain ships sit ‘like targets before a firing squad’ — puncturing Putin’s claim that the Azov was Russia’s uncontested ‘internal sea.’ 

Ukraine has claimed that in the past nine days its drone attacks have hit 116 Russian ships in the so-called “ghost fleet,” according to the General Staff in the Sea of Azov.

These massive drone swarms have been the primary weapon during the ongoing wave of attacks against Crimea as Ukraine tries to expose Russia’s president, Vladimir Putin, as unable to defend the peninsula, which Russia illegally annexed in 2014. 

The Ukrainian attacks have targeted gas and oil refineries, military logistics convoys, power stations, as well as roads and railways leading into Crimea.

The attacks have caused massive gas shortages, resulting in long lines at gas stations, rationing, and power outages on the peninsula.

Ukraine’s increased attacks on Russian energy facilities in recent months are part of Ukrainian President Zelenskyy’s 40-day influence operation to “systematically disrupt the enemy’s logistics chain” and pressure Moscow to end the war.

Russia’s “Shadow Fleet” In The Sea Of Azov Has Been Hit Hard 
Ukraine launched further attacks to damage Russia’s so-called “shadow fleet” and to limit Russia’s fuel supplies to Moscow’s illegally occupied Crimea.

Ukraine claims that forces have struck 116 vessels over the past nine days in the Sea of Azov in operations targeting Russian shipping.

The Sea of Azov is small, so most of the tankers and cargo ships that operate there are smaller. However, it doesn’t detract from the damage they are inflicting on Russian supply efforts.

Because of the damage Ukraine’s strikes are causing to Russia’s gas and oil refineries, they have been forced to move more oil and gas than normal across the Azov in an attempt to resupply their needs.

On Saturday, Ukraine said 21 Russian oil tankers were struck in the Sea of Azov in one of the largest Ukrainian drone strikes on Russian shipping since the start of the war.

Latest Drone Attack Targeted 11 Ships 
In the most recent attack, Ukrainian drones hit five tankers, five bulk carriers and one tugboat, according to Major Robert “Magyar” Brovdi, the head of a Ukrainian Unmanned Systems Forces, a Special Operations Forces unit, known as “Magyar’s Birds.”....

....MUCH MORE 

 Chicago futures are up 33'6 (5.23%) on the day.

 

TradingView

caution: note potential double-top 

 If interested see also:

July 10 -Wheat and Soybean Futures Pop On USDA Production and WASDE Reports

Soybeans have given back much of the initial jump, wheat maintains.

July 10 -Agriculture: "USDA Reports Summary"

July 12 - The World Runs On Diesel and Diesel Is Running out

With Russian shipping and refining capacity getting whacked we're seeing crack spreads greater than the price of crude itself.

Producer Price Index: "PPI for final demand declines 0.3% in June; goods fall 1.4%, services increase 0.2%"

We are still seeing inflation/price gouging in brokerage and investment advisory fees. 

From the Bureau of Labor Statistics, July 15:

The Producer Price Index for final demand fell 0.3 percent in June, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.6 percent in May and 1.1 percent in April. (See table A.) On an unadjusted basis, the index for final demand increased 5.5 percent for the 12
months ended in June. 

The June decline in the index for final demand can be attributed to prices for final demand goods, which fell 1.4 percent. In contrast, the index for final demand services moved up 0.2 percent. 

The index for final demand less foods, energy, and trade services increased 0.1 percent in June after jumping 0.8 percent in May. For the 12 months ended in June, prices for final demand less foods, energy, and trade services rose 5.1 percent. 

Final Demand

Final demand goods: The index for final demand goods moved down 1.4 percent in June, the largest decrease since falling 1.9 percent in July 2022. Leading the decline in June, prices for final demand energy dropped 6.4 percent. The index for final demand foods moved down 0.6 percent. Conversely, prices for final demand goods less foods and energy increased 0.2 percent.

Product detail: Nearly two-thirds of the June decline in the index for final demand goods can be traced to prices for gasoline, which dropped 12.0 percent. The indexes for diesel fuel, jet fuel, fresh vegetables (except potatoes), crude petroleum, and thermoplastic resins and materials also fell. In contrast, prices for plastic products advanced 1.6 percent. The indexes for residential electric power and for potatoes also increased. (See table 2.)

Final demand services: The index for final demand services rose 0.2 percent in June after falling 0.1 percent in May. Over 60 percent of the advance can be attributed to margins for final demand trade services, which moved up 0.4 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand services less trade, transportation, and warehousing increased 0.1 percent. Conversely, the index for final demand transportation and warehousing services declined 0.1 percent.

Product detail: Half of the June increase in the index for final demand services can be traced to margins for fuels and lubricants retailing, which jumped 13.0 percent. The indexes for securities brokerage, dealing, and investment advice; furniture retailing; apparel, jewelry, footwear, and accessories retailing; loan services (partial); and inpatient care also rose. In contrast, margins for machinery and vehicle wholesaling declined 8.4 percent. The indexes for food and alcohol wholesaling and for deposit services (partial) also fell.....

....MUCH MORE

Capital Markets: "US Dollar is Mostly Firmer, August WTI Recovers above $80, and China's GDP Disappoints but New 3-year Low Dollar Fix"

From Marc Chandler at Bannockburn Global Forex: 

The US dollar is mostly firmer today, but largely within the well-worn ranges seen recently against most of the G10 currencies. The news stream is light, but the US has stepped up the strikes against Iran, and August WTI is back around $80 a barrel. The eurozone’s May industrial output unexpectedly fell, while Japan May industrial output was revised lower but activity in the service sector improved. China’s Q2 GDP disappointed, though June retail sales and industrial output were firmer than expected. 

Earlier this month, the US reported disappointing jobs growth in June and yesterday reported a softer than expected June CPI. After Federal Reserve Governor Waller’s seemingly hawkish comments on Monday, there was increased speculation of a rate hike as early as this month’s FOMC meeting. After the CPI, the odds were more than halved. Fed Chair Warsh maintained his hawkish line and commitment to bring inflation down in his testimony before Congress yesterday. He returns to testify before the Banking Committee today. The questions will differ, but the answers will remain the same....

....MUCH MORE 

Fancy Machines: "ASML raises 2026 forecast, expands capacity on AI chip demand"

Probably the world's fanciest.*

From Reuters via Euronext, July 15:

ASML, the world's biggest supplier of computer chip manufacturing equipment, raised its 2026 financial forecasts on Wednesday and will expand capacity after AI demand drove better-than-expected second-quarter earnings.

Europe's largest company by market capitalisation said it now expects full-year 2026 net revenue of €43 billion to €45 billion ($49 billion to $51 billion), an increase of 16% at the midpoint from its earlier forecast range of €36 billion to €40 billion.

Revenue for the three months ended June 30 was €9.33 billion, topping analysts' estimates of €8.80 billion, while net income was €2.92 billion, above expectations of €2.62 billion, according to LSEG data.

"Blowout results across the board, I wonder where they found this much new capacity," said Michael Roeg, senior equity analyst at Degroof Petercam.

Shares rose 5.7% in early trading in Amsterdam.

ASML PLANS 30% CAPACITY EXPANSION IN EACH OF NEXT TWO YEARS

The Dutch company is the world's only maker of extreme ultraviolet lithography (EUV) tools, which are essential for making cutting-edge chips. Its customers including TSMC, Samsung, SK Hynix and Micron are racing to add capacity for AI-related demand.

Chief Executive Christophe Fouquet flagged "extremely strong" order intake due to demand for AI chips.

"Our customers in turn continue to accelerate their capacity expansion plans ... providing ASML with increased visibility into longer-term demand," he said in a statement.

ASML said it intended to expand capacity by 30% in each of the next two years for its flagship EUV tools, as well as for deep ultraviolet (DUV) tools needed for less advanced chips and by customers in China.

Analysts from JPMorgan said they believed Wednesday's results would help ASML close a valuation gap with U.S. peers.

"The message from bears has been that they are capacity-limited or that they don't grow ... (but) the company is virtually guiding 30% growth in the next two years," they said....

....MUCH MORE 

*This 165 tonne beauty cost $380 million in 2024:

 

—ExtremeTech 

Rabobank's Michael Every Writes About Stuff (China, Europe, Iran et al.)

Via ZeroHedge, July 14: 

By Michael Every of Rabobank

Whose-muz?

Oil leaped 9%, the largest move since 2020. Today, it’s up another 2.5% to $85 at time of writing. It’s a good job we also have the Cleveland Fed’s trimmed-mean inflation measure out as well, right? Obviously, oil was driven by developments in Hormuz - or rather Whose-muz? There, besides reimposing the naval blockade of Iran, President Trump stated those using the waterway will now pay 20% of the value of cargo as compensation to the US, the strait’s new guardian. While the proposed Iranian toll the US rejected was $2m per tanker, or $1 per barrel of oil and $22 per tonne of LNG, Bloomberg estimates Trump fees at $30m per supertanker, the equivalent of $8 on oil and $177 on LNG. Naturally, the UN shipping agency is opposed to any fees for any strait and wants details on that Trump tariff – as if that will stop it.

More bluntly, Iran responded with missile attacks on tankers, with two from the UAE hit, as well as more strikes against the GCC and US military bases, the latter so far avoiding both energy and critical infrastructure. As we noted in ‘Comfortably Bomb’ yesterday, Iran can’t destroy such facilities and build bridges to the GCC if it sees itself defeating the US and gaining regional leadership. By contrast, the US is again in ‘take it down’ mode: Trump is reportedly weighing taking out Iran’s Pickaxe Mountain nuclear site, requiring a phenomenal explosion to neutralise.

Keeping out of the fight so far is Israel: the 2026 headline there from the New York Times is Mossad trying to recruit former Iranian President Ahmadinejad as an agent, and potential front man, in a failed plan for regime change. However, the Yemeni government, OK’d by the Saudis after Trump approval, bombed a runway in Houthi-occupied Sanaa to try to prevent an Iranian plane landing; now the Houthis are firing at the Saudis again for the first time in years, potentially endangering vital east-west oil flows via Yanbu on the Red Sea.

The realpolitik take is more evidence of a new (old) Mahan world disorder where countries use force to impose or restrict maritime trade flows: first Iran, now the US; the devastating Ukrainian attacks on Russian ships in the Sea of Azov is another concurrent example; and note the Hong Kong press asks, ‘Will Manila and Hanoi’s maritime deal challenge Beijing in the South China Sea?’

It’s also the US underlining that it’s fighting for a region, and world economy, that benefits from an open Hormuz but will no longer do it for free. Indeed, there’s a US message to the GCC and NATO/Europe/US allies – help us win this fight rather than saying ‘Not our war’ again. Don’t be surprised if anyone who aids the US now gets the 20% tariff lifted - which still implies it will have to be imposed on others to create that incentive.

If you think that’s cynical, in some see this as the US keeping Hormuz closed so it benefits as an LNG exporter. Indeed, as Dubai plans a new east-coast port for oil, LNG giant Qatar looks badly placed, Doha now looking at a project with the US (which likely won’t pay a penny?) for an Iraq-Syria pipeline. Even outside energy, the Asian press note the US has emerged as the helium winner amid the Iran war and China’s restrictions on exports of that key gas needed for chipmaking, with Taiwan, Japan, and South Korea turning to America for flows.

Which model?

Obviously not recalling all the reports on how Germany was artificially competitive within the Eurozone because of the low FX rate it was allowed to join at, Chancellor Merz just called for a dialogue with China on its monetary and FX policy, saying that the EU could not win, no matter how innovative or good the bloc may be, against a competitor that artificially manipulates its currency. He argued that CNY is 20-30% undervalued and needs to be allowed to float more freely so that it can appreciate to a fairer level. In this, listening to Europe in 2026 is like listening to the US in 2016.

To be clear, there is no world in which China will allow, or Europe is in any way able to impose, a new Plaza Accord on China: it is not going to happen. End of discussion. China could decide it wants to see CNY appreciate for its own reasons, such as to shift towards consumption as a growth driver, which is different. However, that’s a strategic theme echoed for decades by (mostly Western) economists, who are constantly surprised when it doesn’t happen and China’s trade surplus grows, and ever higher up the value-added ladder.

Yet the surging Chinese trade surplus with the EU, which is now larger than with the US...

....MUCH MORE 

AI: "Thomson Reuters to cut 'small number' of engineering jobs"

That's the headline at Reuters. 

At Silicon Republic:

Thomson Reuters cuts 500 jobs as AI adoption deepens 

And back to Reuters via The Edge, Malaysia: 

Thomson Reuters to sell 51% stake in global print business to KKR for US$500 million 

As far as I know the Thomson family is still doing alright, headed up by David, 3rd Baron Thomson of Fleet and his wealthier cousin, Sherry Brydson, the richest woman in Canada.

"IBM’s stock dives toward worst day in nearly 40 years after the surprise release of an earnings miss"

From MarketWatch, July 14:

Tech bellwether releases preliminary results a week before earnings were expected, showing revenue and profit misses 

Shares of IBM took a deep dive in early Tuesday trading toward their worst day in decades, after the technology giant surprised investors by releasing second-quarter results a week ahead of schedule, showing both profit and revenue missing analysts’ consensus expectations.

The problem was the launch of the z17 mainframe program, which the company expected to be wrapping up during the second quarter.

“What played out was worse than our expectations, driven by a shortfall in our Z performance and the associated software stack, primarily in transaction processing,” CEO Arvind Krishna said in a statement.

The stock tumbled 19.1% in premarket trading. That puts it on track for its biggest one-day selloff since the record 23.7% drop on Oct. 19, 1987, a date known as Wall Street’s “Black Monday.”

He said that in the last few weeks of June clients shifted capital expenditures toward memory purchases, storage and servers ahead of expected price increases, which impacted client buying patterns.

While some supply-chain-related impact to IBM’s prior expectations were foreseen, “we did not anticipate the magnitude of the capex reprioritization,” Krishna said....

....MUCH MORE 

I'm not sure anyone still considers IBM a tech bellwether anymore. Truth be told I had to double-check that they were still a component of the Dow Jones Industrial Average. (they are)

The company may have enough quantum computing stuff to make it worth sniffing around but the bellwether days are long past. 

Inflation: CPI Headline DOWN 0.4% For June; UP 3.5% Year-Over--Year

From the Bureau of Labor Statistics, July 14: 

CONSUMER PRICE INDEX - JUNE 2026

The Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.4 percent on a seasonally adjusted basis in June after rising 0.5 percent in May, the U.S. Bureau of Labor Statistics reported today. This decline in the all items index was the largest 1-month decrease since April 2020 when it fell 0.8 percent. Over the last 12 months, the all items index increased 3.5 percent before seasonal adjustment.

The index for energy fell 5.7 percent in June after rising 3.9 percent in May, 3.8 percent in April, and 10.9 percent in March. The energy index was the largest contributor to the monthly all items decrease, more than offsetting increases in other indexes including those for shelter and food. The index for food increased 0.2 percent over the month, as did the index for food at home and the index for food away from home. 

The index for all items less food and energy was unchanged in June. Indexes that decreased over the month include motor vehicle insurance, communication, apparel, medical care, and used cars and trucks. Conversely, the indexes for recreation, household furnishings and operations, and personal care were among the major indexes that increased in June.

The all items index rose 3.5 percent for the 12 months ending June after rising 4.2 percent for the 12 months ending May. The all items less food and energy index rose 2.6 percent over the year, following a 2.9-percent increase over the 12 months ending May. The energy index increased 15.7 percent for the 12 months ending June. The food index increased 3.0 percent over the last year....

....MUCH MORE, including narrative discussion and the always interesting Table 2.

Capital Markets: "Oil Extends Recovery, US Dollar Consolidates, JGBs Rally on New Fin Min Suggestion, China's June Trade Surplus Swells"

From Marc to Market: 

The US dollar is consolidating yesterday’s gains today. An off-ramp to the Middle East conflict seems increasingly elusive. After surging more than 9% yesterday, the front month WTI and Brent oil futures contracts are up 3.6%-4.6% today. There are three developments in the US that will be closely monitored today. First, the June CPI is due. It looks to have moderated a little, but given Governor Waller’s comment yesterday, a sticky core rate could boost the perceived chances of a hike later this month. Second, Chair Warsh testifies before the House Financial Services Committee (10:00 AM ET). Third, the US earnings season gets underway with several large bank reporting today. 

Japanese government bonds have rallied today despite continued rally in oil prices and a soft yen. Last week, Finance Minister Katayama suggested that Japanese pension funds boost their domestic allocation. Today, she advocated adding government bonds to the individual tax-free investment vehicles. Meanwhile, the dollar is holding above JPY162.00. Lastly, China reported a larger than expected, $125.6 bln June trade surplus, which will likely increase the tension with the US and Europe....

....MUCH MORE    

"JPMorgan, Bank of America and Wells Fargo earnings are out: Live updates"

 From CNBC, July 14:

This is CNBC’s live coverage of bank earnings reports for JPMorgan, Bank of America, Goldman Sachs, Wells Fargo and Citigroup. 

JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and Goldman Sachs are reporting earnings before the markets open Tuesday.

Investors expected that the five big banks would see strong revenue from trading equities and fixed income during the second quarter.

The SpaceX IPO drove surging fees for Goldman Sachs and Morgan Stanley, while commercial lending is showing signs of a turnaround and consumer credit is expected to remain resilient.

What you need to know:

• JPMorgan Chase earnings are out. Here are the numbers
• Wells Fargo earnings are out. Here are the numbers
• Bank of America earnings are out. Here are the numbers.
• Here’s what to expect from Goldman Sachs
• Here’s what to expect from Citigroup
• It’s unusual for five megabanks to all report on the same morning

Earlier from CNBC:

U.S. Earnings: "Big banks poised to report booming revenue propelled by SpaceX IPO, Iran war volatility" (JPM; BAC; C; WFC; GS; MS)

U.S. Earnings: "Big banks poised to report booming revenue propelled by SpaceX IPO, Iran war volatility" (JPM; BAC; C; WFC; GS; MS)

From CNBC, July 13:

• JPMorgan, Bank of America, Citigroup, Wells Fargo and Goldman Sachs are set to report earnings early Tuesday, followed by Morgan Stanley on Wednesday
• Investment banking revenue could jump 26% and trading revenue could rise 14% from a year ago, according to KBW’s Chris McGratty.
• The SpaceX IPO drove surging fees for Goldman Sachs and Morgan Stanley, including debt-raising work and “soft dollars” from hedge funds on the oversubscribed deal.
• Commercial lending is showing signs of a turnaround as banks compete with private credit lenders for AI-fueled corporate spending. 

Expectations are high that when banks start posting second-quarter results Tuesday, led by JPMorgan Chase and Bank of America, revenue from trading equities and fixed income will approach, or even exceed, the records set earlier this year.

That’s a key part of what veteran analyst Mike Mayo of Wells Fargo calls the “sweet spot” in the financial sector right now. Both of banking’s profit engines — Wall Street and Main Street — are in growth mode at the same time.

The largest U.S. banks are raking in rising fees from helping corporations tap the markets, punctuated by last month’s giant SpaceX IPO, while risk-taking traders are also thriving as geopolitical unrest including the Iran war stokes volatility across asset classes.

“You saw the largest IPO in history, a pace of mergers that’s on track to be a record year, and a broadening out of trading to include equity and fixed income across myriad geographies,” Mayo told CNBC.

The quarter’s big bank earnings come at an unusually favorable moment for the industry. After years of navigating higher interest rates and inflation-fueled recession fears, lenders are benefiting from a rare combination of booming Wall Street activity, resilient consumer credit and a long-awaited pickup in business lending.

“There’s not much more you can ask for,” Mayo said....

....MUCH MORE 

And to Our Friends in France

A couple previous Bastille Day posts:

June 14 2020 [commenting on July 14, 2019's disaster]

We'll return to our usual graphic and contemplate whether to memory-hole last year's embarrassment.*

See you next month!
*July 15, 2019
An Apology To Our French Speaking Friends on the Day After Bastille Day
This is embarrassing.
I mislabeled a painting.
To note yesterday's holiday the blog went with one of Monet's Festival of 30 June 1878 paintings.
The date isn't the problem, I wanted a pic of the tri-color and despite it not representing a Bastille Day scene, thought that with the label folks would understand that we understood.
Ahem.

Claude Monet, Rue Montorgueil, Paris, Festival of 30 June 1878.

This morning I looked at the painting and wondered why it seemed so dark so I went to the website of the Musée d'Orsay and "ah crap". 

That's the Rue St. Denis, not the Rue Montorgueil and it hangs at the Musée des Beaux-Arts de Rouen. 

It's the fraternal twin of the pic I was going for:

Which is at the Musée d'Orsay.

Someone should let the The Paris Review know as well.

However, the fact they got it wrong doesn't matter, we are responsible for our little corner of the internet.

The Musée d'Orsay adds insult to injury by starting their description with:

The Rue Montorgueil, like its twin painting The Rue Saint-Denis (Rouen, musée des Beaux-arts), is often thought to depict a 14 July celebration. In fact it was painted on 30 June 1878 for a festival declared that year by the government celebrating "peace and work". This was one of the events organised for the third Universal Exhibition in Paris a few weeks after it opened, and intended to be a symbol of France’s recovery after the defeat of 1870. As well as demonstrating nationalist enthusiasm, the celebrations of 30 June 1878 were also an opportunity to strengthen the position of the Republican regime, still fragile only a few months after the major confrontations of 1876-1877 between its supporters and the conservatives. It was only two years later, in 1880, that 14 July was designated the French National Day.....

Non! We knew it wasn't 14 July, it's that we messed up the darn paintings.
Easier to go with the little girl and her tri-color.
back in a month. 

And July 14, 2025: 

"France to quicken defense-spending boost in bid to be ‘feared’"

Umlauts. Fräncë needs umlauts if they truly intend to inspire dread wherever they turn their Gallic gaze.*

From DefenseNews, Bastille Day, 2025:

 

French military vehicles stand in formation for the annual Bastille Day military parade on the 

Champs-Elysees Avenue with the Arc de Triomphe in the background in Paris on July 14, 2025. 

France will accelerate a hike in defense spending to reach €64 billion (US$75 billion) in 2027, three years earlier than planned, President Emmanuel Macron told troops and military brass ahead of Bastille Day celebrations on July 14.

In the face of the greatest threat to freedom since 1945, France needs to step up, the president said in his traditional speech at the Armed Forces Ministry in Paris the evening before the national holiday. Macron said Europe must be ready to face a permanent Russian threat on its borders, from the Caucasus to the Arctic....

...MUCH MORE
*From January 2014's "After Car Attacked By Paris Taxi Drivers, Uber to Toughen Image With Umlauts ": 

In a move designed to make Uber seem more "bad-assed and scary in a quasi-heavy-metal manner," the Goldman Sachs, Menlo Ventures and Bezos Expeditions-backed company officially changed it's name to Über on  Monday.

"Much like Mötley Crüe and Motörhead, Über is not to be messed with," said founder Gärrëtt Cämp, né Camp...

"Ödërïnt, düm mëtüänt" (Let them hate so long as they fear)