10-year Treasury yield shoots above 4.6% after hot CPI report

Key Points

• Shell Plc plans to increase LNG sales by 4% to 5% annually until 2030, aiming to become the world's leading integrated gas and LNG business.
• The company will return up to half of its cash from operations to investors, with a preference for share buybacks.
• Shell's strategy includes cost reductions, spending control, and a review of its chemicals business, potentially leading to asset sales or plant closures in Europe.
• The company expects its free cash flow per share to grow by 10% annually to 2030, with 40% to 50% of cash flow distributed to shareholders.
• Shell's shares have risen nearly 20% in the past two years under new management, outperforming competitors like BP.

Summary

Shell Plc has announced plans to enhance investor returns by focusing on its position as the world's top trader of liquefied natural gas (LNG). The company aims to increase its LNG sales by 4% to 5% each year until 2030, which will help in returning up to half of its operational cash flow to shareholders, primarily through share buybacks. This strategy follows a two-year "sprint" by CEO Wael Sawan to streamline operations, cut costs, and improve reliability. Shell's shares saw a 1.9% increase following the announcement. The company also plans to review its chemicals business, potentially leading to asset sales or plant closures in Europe, while maintaining a tight control on spending. Shell's focus on LNG is part of its broader strategy to transition towards lower-carbon energy, with expectations of a 20% to 30% growth in its LNG business by 2030. Despite a slight pivot away from renewables, Shell remains committed to reducing the carbon emissions intensity of its products.

Key Points

• The DOGE commission, led by Elon Musk, is cutting IRS resources, which will impair its ability to collect taxes from wealthy tax evaders.
• The tax gap, the difference between what is owed and what is collected, is nearly $700 billion annually, largely due to underfunding of the IRS.
• Reducing the tax gap could significantly boost federal revenue without increasing tax rates, potentially reducing the budget deficit.
• The GOP strategy seems to be to "starve the beast" by reducing IRS funding, thereby shrinking government revenue and protecting wealthy tax evaders.
• The IRS has been outgunned in its efforts to catch tax evaders, with recent funding increases aimed at improving enforcement now under threat.

Summary

The article discusses the "DOGE" commission, purportedly aimed at enhancing government efficiency but criticized for undermining the IRS's ability to collect taxes, particularly from wealthy tax evaders. The commission, led by Elon Musk, is accused of cutting IRS staff and resources, which could exacerbate the annual tax gap of nearly $700 billion. This gap represents uncollected taxes, predominantly from the top earners, who benefit from complex income sources that are harder to tax. Despite a recent $80 billion boost to the IRS's budget by a Democrat-controlled Congress to improve enforcement and technology, Republican efforts, including those from the DOGE commission, aim to rescind this funding. This approach not only increases the national debt but also contradicts claims of fiscal responsibility, especially as it could hinder revenue collection needed for proposed tax cuts. The strategy appears to align with a broader GOP tactic to reduce government size by limiting its revenue, thereby protecting the wealthiest from paying their due taxes.

Key Points

• The US economy is experiencing a narrative shift, with growth projections for 2025 being revised downwards by the Federal Reserve and Wall Street forecasters.
• Despite the slowdown, there's no consensus on an imminent economic downturn; instead, the economy is described as cooling but not collapsing.

Summary

The US economy is undergoing a narrative shift as growth projections for 2025 have been revised downwards by both the Federal Reserve and Wall Street analysts. Federal Reserve Chair Jerome Powell described the economy as "healthy" despite lowering the GDP projection to 1.7% from 2.1%. Major financial institutions like JPMorgan, Morgan Stanley, and Goldman Sachs have also adjusted their forecasts lower, citing potential impacts from President Trump's tariff policies. However, these revisions do not signal an immediate economic downturn but rather a moderation in growth. Powell noted that while the probability of a recession has increased slightly, it remains relatively low. Despite some indicators like consumer sentiment showing signs of worry, hard data like retail sales and PMI suggest that the economy is still on solid ground, with no immediate signs of a recession. This nuanced economic landscape leaves investors questioning whether growth forecasts will stabilize or continue to decline, potentially affecting stock market performance.