China Flexes, Surrounds Taiwan

Morning Meeting

VBL

May 23, 2024

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Housekeeping: Good Morning.

BW3 is a Process, Not an Event.

Between earth and moon will be business. Nasa will control the rest- Shatner

Today:

Premium: MUFG Commodity Weekly on Metals
Commentary: China Post Divorce Flex

Markets Yesterday:

US equities retreated on Wednesday as investors considered monetary policy and corporate earnings results

Premium/Markets: MUFG Commodity Weekly

Base metals: Copper continues to trade in uncharted territory, testing all time highs from a striking short squeeze on the Comex. Copper’s path to scarcity is garnering traction which absence any near-term mine supply solver, the only way to maintain market function will be via demand destruction.

Continues at bottom…

China Flexes, Surrounds Taiwan

The Eastern Theater Command of the Chinese People's Liberation Army (PLA) started joint military drills surrounding the island of Taiwan from 7:45 a.m. Thursday, according to Xinhua.

Military services including the army, navy, air force and rocket force of the theater command are being organized to conduct the joint drills, code-named Joint Sword-2024A

The drills are being conducted in the Taiwan Strait, the north, south and east of Taiwan Island, as well as areas around the islands of Kinmen, Matsu, Wuqiu, and Dongyin.

Market News: Skin Shedding

Old economy/new economy, Services, housing inflation dropping priority, Rate cuts fade

"Nvidia reported that sales more than tripled in its latest quarter and gave a sales forecast that signaled the AI boom that lifted the chip maker above a $2 trillion valuation is still going strong." Source: WSJ 10 for 1 stock split

"Federal Reserve officials grew more concerned at their most recent meeting about inflation, with members indicating that they lacked the confidence to move forward on interest rate reductions. " Source: CNBC

"Sales of US existing homes unexpectedly fell for a second month in April, adding to evidence that the resale market is struggling for traction amid near-record prices and high borrowing costs." Source: Bloomberg

"Goldman Sachs Group Chief Executive Officer David Solomon said he currently expects that the Federal Reserve won’t cut interest rates this year, amid an economy that’s proved more resilient thanks to government spending." Source: Bloomberg

Geopolitics:

China's military began joint military drills surrounding Taiwan, according to Chinese state media.
Senior Taiwanese Security Official said around 30 Chinese military planes and a dozen military ships came close to Taiwan as of midday Thursday, some of which crossed the Taiwan Strait median line and approached close to areas of Taiwan contiguous zone
US Defense Secretary Austin advocated during a call with Israeli Defence Minister Gallant for an effective mechanism to deconflict humanitarian and military operations in Gaza, according to the Pentagon.

Some headlines via NewSquawk or DataTrek