Baltic Dry Index. 1948 +06 Brent Crude 82.35
Spot Gold 2323 US 2 Year Yield 4.67 -0.01
In
the run up to the UK General Election on July 4, the LIR will play its part.
Truth is relative. Truth is what you can make the voter believe is the truth. If you're smart enough, truth is what you make the voter think it is. That's why I'm a Democrat. I can make the Democratic voters think whatever I want them to.
James Carville.
In
the stock casinos, a mixed start to the week. In the USA, a holiday shortened
trading week.
In
Europe, France is just 13 days out from round 1 of their Parliamentary elections. Th UK just 17 days out from the General
Election which polls forecast to be a landslide for the hard left.
It’s
the Bank of England’s turn on interest rates this week on Thursday, but no
change is expected with a General Election this close.
In
Australia, China’s Prime Minister is on a visit to reset trade and other
relations. So today we focus on China and how China is increasingly dominating
global trade.
Hong Kong stocks reverse losses as investors
assess key China data; Nikkei tumbles almost 2%
Asia-Pacific markets are mixed on Monday as the
region assesses key
economic data out from China.
The world’s second-largest economy
released May numbers for its retail sales, industrial output and urban
unemployment rate.
China’s retail sales beat
expectations in May, climbing 3.7% compared with a year ago, beating
expectations of a 3% rise from a Reuters poll of economists.
However, other economic metrics,
such as industrial output and fixed asset investment, missed Reuters forecasts.
Industrial output grew by 5.6% year-on-year, compared to the 6% increase
expected, while fixed asset investment rose 4% compared to last May, just shy
of the 4.2% forecast by the Reuters poll.
The urban unemployment rate held
steady at 5% in May, unchanged from April, and 0.2 percentage points lower than
that of May last year.
Separately, the People’s Bank of
China held its one-year medium term lending facility rate at
2.5% on 182 billion yuan ($25.09 billion) worth of loans, as expected.
The central bank also injected 4
billion yuan through seven-day reverse repurchase operations and kept the seven
day interest rate steady at 1.8%.
Hong Kong Hang Seng index reversed
losses and was up 0.71% after the MLF and data announcement, while the CSI 300
on mainland China slid 0.1%.
Japan’s Nikkei 225 tumbled
1.82%, dragged by energy and real estate stocks, while the Topix also saw a
similar loss of 1.49%.
South Korea’s Kospi fell
0.31%, and the small-cap Kospi also was down 0.45%, reversing earlier gains.
Australia’s S&P/ASX 200 slipped
0.13%. Traders will be bracing for the Reserve Bank of Australia’s rate
decision on Tuesday.
On Friday in the U.S., the Nasdaq Composite notched
a fifth straight winning session, adding 0.12%, while the S&P 500 inched
lower by 0.04%, to snap a four-day winning streak.
The Dow Jones Industrial Average slipped
0.15%, to mark four straight days of losses.
Asia stock
markets live: PBOC MLF, China retail sales, unemployment (cnbc.com)
Stock futures are little changed ahead of a
holiday-shortened trading week: Live updates
UPDATED SUN, JUN 16 2024 6:58 PM EDT
Stock
futures were little changed on Sunday evening ahead of a holiday-shortened
week.
Futures
tied to the Dow Jones
Industrial Average hovered under the flat line. S&P 500
futures and Nasdaq 100 futures added
0.03% and 0.1%, respectively.
Last
week, the Dow slipped
57 points on Friday, while the S&P edged
lower by 0.04% and the Nasdaq Composite eked
out a 0.12% gain to close at a record for the fifth session in a row. For the
week, the major averages were mixed, with the blue-chip Dow posting its third
losing week in four, while the S&P and Nasdaq notched their seventh up week
in the last eight, buoyed by the recent rally in tech.
In the week ahead, investors will
wonder if that rally can continue, with
cracks emerging in the market outlook.
“There’s really these two themes
… investors are trying to play this year,” NB Private’s Shannon Saccocia told
CNBC’s “Closing Bell” on Friday. “One has been the secular AI theme and then
one has been this idea of manufacturing, reshoring and, frankly, continued
strong economic growth.”
“We are seeing a little bit of
weaker economic data and maybe you’re getting a breather or a sigh that perhaps
this … reacceleration from a manufacturing and industrial perspective is slower
to move than what we’re seeing from an AI standpoint,” she added.
This week will be a
holiday-shortened week, with markets closed Wednesday for the Juneteenth
holiday.
Investors are monitoring May
retail sales data, due out on Tuesday, as well as home sales and housing starts
data later in the week. Lennar, Kroger, Darden Restaurants and CarMax will
report quarterly earnings.
Stock futures are little changed ahead of a holiday-shortened trading week: Live updates (cnbc.com)
In other news, mixed news out of China as
China and Australia reset relations.
China May
retail sales beat expectations, but industrial output and fixed asset
investment missed
China’s retail sales
beat expectations in May, climbing 3.7% compared with a year ago, beating
expectations of a 3% rise from a Reuters poll of economists.
However, other
economic metrics, such as industrial output and fixed asset investment, missed
Reuters forecasts.
Industrial output
grew by 5.6% year-on-year, compared to the 6% increase expected, while fixed
asset investment rose 4% compared to last May, just shy of the 4.2% forecast by
the Reuters poll.
The country’s
National Bureau of Statistics elaborated that the total retail sales of
consumer goods reached 3.92 trillion yuan ($540.32 billion), with sales in
urban areas up 3.7% year on year and sales in rural areas climbing by 4.1%.
On the other hand,
the miss in fixed asset investment was dragged by a steeper drop in real estate
investment. NBS said that excluding real estate, total fixed asset investment
was 8.6% higher compared to last May.
Separately, the urban
unemployment rate held steady at 5% in May, unchanged from April, and 0.2
percentage points lower than that of May last year.
China’s exports have held up, growing by 7.6% year-on-year
in May in U.S. dollar terms, beating the Reuters’ forecast for a 6% increase.
But imports missed expectations, rising by 1.8% during that time.
Loan data released
Friday pointed to continued lackluster demand. Outstanding yuan loans rose by
9.3% in May from a year ago, the slowest increase on record since 1978,
according to Wind Information.
M1 money supply, which includes
cash in circulation and demand deposits, fell by 4.2% year-on-year in May, the
most on record since 1986, according to Wind Information.
Goldman Sachs analysts pointed out
that a state media outlet affiliated with China’s central bank attributed the
slowdown in M1 growth to a crackdown on fake loans and outflows related to
wealth management products.
Inflation data for May previously
showed that consumer prices, excluding food and energy, rose by 0.6% from a
year ago.
China
May retail sales beat expectations, other metrics miss (cnbc.com)
Chinese automakers overtake U.S. rivals in sales
for the first time, report shows
Automotive
companies in China sold more cars than their U.S. counterparts for the first
time last year, boosted by BYD and
growth in emerging markets, researcher Jato Dynamics said in a report published
Thursday.
Chinese brands, led by
Shenzhen-based BYD, sold 13.4 million new vehicles last year, while American
brands sold about 11.9 million, the data showed. Japanese brands led with 23.59
million sales.
China’s sales growth also outpaced that of the U.S., up 23% from the
previous year compared with the U.S.’s 9%, according to the report.
“Negligence from legacy automakers,
which has resulted in consistently high car prices, has inadvertently driven
consumers toward more affordable Chinese alternatives,” Jato senior analyst
Felipe Munoz said in the report.
Chinese carmakers, like its leading
car brand BYD, have expanded
globally as an electric-vehicle price war at home has pushed
down prices and weighed on profit margins.
Brands from China have made
particular inroads in emerging economies, where Jato said one in five new car
sales were made last year amid increased global demand.
“Over 17.5 million new cars were
sold in the emerging economies in 2023. That is more than the total sales in
the U.S. or Europe during the year,” said Munoz.
Chinese carmakers
picked up a sizable market share across the Middle East, Eurasia and Africa
while also posting growth in Latin America and Southeast Asia, the report
said.
Meanwhile, some
Chinese brands also picked up share in developed economies, including Europe,
Australia, New Zealand and Israel.
The growth came
despite increased trade animosity between China and the West and other factors,
such as conflicts in Europe, high interest rates and high vehicle prices, Munoz
said.
According to the
report, sales grew in every region, except Africa, with Europe growing the
fastest due to booming demand in Turkey.
But the industry faces increased trade headwinds
in 2024, with more countries enacting measures to protect local industry from
cheap Chinese exports.
This week, the EU
announced an increase in tariffs on Chinese EVs of up to 38%.
That comes after the U.S. quadrupled tariffs on Chinese EVs to
100%.
Turkey also reportedly announced 40% additional tariffs on vehicles from China on
Saturday, signaling that some emerging markets may follow suit.
Chinese automakers overtake U.S. rivals in sales for the first time (cnbc.com)
Global Inflation/Stagflation/Recession
Watch.
Given
our Magic Money Tree central banksters and our spendthrift politicians,
inflation now needs an entire section of its own.
Fed’s Kashkari says it’s ‘reasonable’ to predict
a December rate cut
Minneapolis Federal
Reserve President Neel Kashkari on Sunday said it’s a “reasonable prediction”
that the U.S. central bank will cut interest rates once this year, waiting
until December to do it.
“We need to see more
evidence to convince us that inflation is well on our way back down to 2%,”
Kashkari said in an interview with CBS’ “Face the Nation” program.
The Fed last week
held its benchmark policy rate in the 5.25%-5.50% range, where it has been
since last July, to keep continued pressure on the economy so as to cool
inflation. It also published projections that showed the median forecast from
all 19 U.S. central bankers was for a single interest rate cut this year.
“We’re in a very good
position right now to take our time, get more inflation data, get more data on
the economy, on the labor market, before we have to make any decisions,”
Kashkari said. “We’re in a strong position, but if you just said there’s going
to be one cut, which is what the median indicated, that would likely be toward
the end of the year.”
Kashkari, who has
been more cautious about the possibility of easing monetary policy than many of
his colleagues, did not say how many rate cuts he personally expects.
He said he has been
surprised by how well the U.S. job market has performed even as the Fed raised
borrowing costs aggressively in 2022 and 2023, but that he expects more cooling
ahead.
“I hope it’s modest
cooling, and then we can get back down to more of a balanced economy,” he said.
Inflation by the
Fed’s targeted measure, the year-over-year change in the personal consumption
expenditures price index, registered 2.7% in April. The Fed has a 2% target.
The unemployment rate
in May ticked up to 4%, the highest since just before the Fed launched its rate
hiking campaign in March 2022 but still below what most of its policymakers see
as sustainable.
Asked about the
barrier high borrowing costs pose for people trying to buy a home, Kashkari
said the best thing the Fed can do for the housing market is to bring inflation
back down to target.
More
Fed's
Kashkari says it's 'reasonable' to predict a December rate cut (cnbc.com)
Consumer
sentiment hits lowest level in 7 months
June 15,
2024
Consumer sentiment tumbled in
June, despite largely resilient growth in the US economy, as higher prices remained a pain point for Americans.
The latest University of Michigan
consumer sentiment survey released
Friday showed sentiment hit its lowest level in seven months during June. The
index reading for the month came in at 65.6, down from 69.1 in May and lower
than the 72 economists had expected.
"Assessments of personal
finances dipped due to modestly rising concerns over high prices as well as
weakening incomes," Survey of Consumers director Joanne Hsu said in a
statement. "Overall, consumers perceive few changes in the economy from
May."
The current conditions index fell
from to 62.5 from 69.6 the month prior, contributing to the decline in June's
headline index. Capital Economics North America economist Olivia Cross said
Friday's reading shows "households are now struggling more under the
weight of higher interest rates and still-elevated consumer prices."
Year-ahead inflation expectations were flat at 3.3% from the
month prior. However, most respondents likely didn't have time to factor in recent
positive inflation readings from May. The
interview window for the survey spanned from May 22 to June 12.
This means the last day
consumers could submit survey responses was the same day that May's Consumer
Price Index (CPI) was released. Headline CPI rose 3.3% over the prior year in
May, the lowest monthly headline reading since July 2022.
On Thursday, after the survey
window was closed, the Producer Price Index showed wholesale prices unexpectedly declined from the month
prior in May.
"The press release noted
that consumers were still concerned about high prices, and year-ahead inflation
expectations remained at 3.3%," Cross wrote in a note on Friday.
"That is at odds with price developments for essentials, given that
gasoline prices have eased back and we learned this week that the CPI food at
home index was unchanged in May."
Broadly, the
decline in the index represents a continued trend among consumers who are fed up with
higher prices regardless of whether inflation is cooling and the labor market
remains on solid footing.
More
Consumer sentiment hits lowest level in 7 months
(msn.com)
Why the Fed's rate-cutting agenda could spark a
recession, according to top economist Mohamed El Erian
June
14, 2024
The Federal Reserve's path of
rate cuts could be what ends up causing a US recession, according to top
economist Mohamed El-Erian.
El-Erian, who has been
flagging the risk of a US recession for
the past several years, cast another warning about the state of the economy
after central bankers opted to keep interest rates level at
their last policy meeting.
Fed
officials said they needed more confidence that inflation was on track to fall
back to its 2% target before loosening monetary policy.
Officials also dialed back
their projection for rate cuts by the end of the year, with median central bank
estimates calling for just one 25 basis-point cut in 2024, according to projections released
by the Fed.
Central bankers suggested
that their most likely move would be to issue one rate cut in December,
El-Erian said in an interview with Yahoo Finance on
Thursday, but a rate cut by the end of the year would be "too late,"
he warned, given that the economy already faces an elevated risk of recession.
"In
my opinion, 'too late' is what was reflected in yesterday's SEP or dot
plot," El-Erian said, referring to the Fed's Summary of Economic
Projections. "By that time, the lagged effects of what was a significant
increase in rates would be biting even more."
US consumers are
already grappling with the higher cost of living. The pile of excess cash
that's cushioned small businesses and lower-income households has likely
already been spent, with pandemic savings estimated
to have run out in March, according to the San Francisco Fed.
Household
debt levels have also climbed to an
all-time high of $17.6 trillion, while a growing number of auto and credit card
loans have transitioned into late-payment status, according to New York Fed
data.
"I worry that if they
carry through on what is in the SEP, that will be too late," El-Erian
added, though he noted that the Fed may choose to further loosen monetary
policy when factoring in soft May inflation data.
Consumer and producers prices rose less than expected last month.
Though the Fed has signaled
just one cut, investors still see two to three cuts by year-end, according to
the CME FedWatch tool.
More
Covid-19 Corner
This section will continue until it becomes unneeded.
COVID-19: Investigation reveals how American military
undermined Chinese vaccine
According
to the report, the campaign aimed to sow doubt about the efficacy and safety of
the Chinese vaccine and neutralise China's rising influence in Asia and the
world.
In what could be described as a war for market control, a
new investigative report by Reuters has
exposed how the United States Department of Defence, Pentagon, secretly carried
out an anti-vaccine campaign to discredit the Sinovac vaccine, which China
produced.
The
report states that the campaign ran specifically in the Philippines between
2020 and 2021, at the height of the pandemic, which shook the world, claiming
thousands of lives and paralysing the global economy.
Inside report
Published
on Friday, the report revealed that American officials coordinated a
clandestine effort during the administration of former President Donald Trump.
The campaign against Sinovac ran for many months into the administration of Mr
Trump’s successor, Joe Biden.
According
to the report, the campaign aimed to sow doubt about the efficacy and safety of
the Chinese vaccine and neutralise China’s rising influence in Asia and the
world. At the same time, the American government quietly rolled out vaccines to
its citizens.
The report states that the officials launched a
disinformation programme using over 300 fake social media accounts, especially
on X (formerly Twitter), to impersonate Filipinos, warning others to avoid
China’s vaccine.
These bot accounts
reportedly posted a handful of purported gripes over the quality of face masks,
test kits, and China’s Sinovac vaccine with the hashtag “Chinaangvirus” (“China
is the virus” in Tagalog).
“COVID came from
China and the VACCINE also came from China, don’t trust China!” one typical
tweet from July 2020 reportedly read in Tagalog. The words were said to have
been placed beside a syringe photo beside a Chinese flag and a soaring chart of
infections.
Another post reads:
“From China PPE, Face Mask, Vaccine: FAKE. But the Coronavirus is real.” COVID
came from China and the VACCINE also came from China, don’t trust China!”
In the report,
Reuters said the phoney accounts used by the US military had tens of thousands
of followers during the programme.
Reuters could,
however, not determine how widely the anti-vax material and other
Pentagon-planted disinformation were read or the extent of COVID deaths it
might have caused.
More
Technology
Update.
With events happening fast in the development
of solar power and graphene, among other things, I’ve added this section.
Updates as they get reported.
Twisted Graphene Hints at New Path for
Room-Temperature Superconductors
June
15, 2024
The Science
In an isolated atom, electrons occupy orbitals
with different energy levels. When the orbitals come together in a solid form,
they merge into energy bands. The dispersion in energy of these bands depends
on the arrangement of the atoms and the way the electrons move and interact
with each other. A small energy dispersion, also called flat band, indicates
electrons that have very low velocity but that interact very strongly through
their Coulomb repulsion. This type of band structure can be found when two layers
of graphene are twisted relative to each other. At precise twist angles, known
as magic angles, the layers of graphene will exhibit flat bands and
unconventional electronic properties, including superconductivity.
However, theory says these flat bands should be incompatible with
superconductivity. In fact, electrons that move so slowly should not conduct
electricity at all.
In this work, researchers
investigated what causes superconductivity in twisted bilayer graphene. The
current theory of superconductivity, the Bardeen-Cooper-Schrieffer (BCS)
theory, cannot explain materials that are superconducting at temperatures far above
absolute zero degrees. This is a great unsolved problem in physics. The
presence of superconductivity in twisted bilayer graphene, with its very slow
electrons, shows that scientists need to modify the BCS equations. The
equations must include the geometry of the space where the quantum electrons
live. This finding offers new directions in the search for materials that
superconduct at high temperatures. These superconductors would enable important
real-world applications, such as electric transmission lines that lose almost
no power.
More
Twisted Graphene
Hints at New Path for Room-Temperature Superconductors (msn.com)
Next, our
latest new section, the world global debt clock. Nations debts to GDP compared.
World Debt
Clocks (usdebtclock.org)
If everybody in this town connected with politics had to leave town because of chasing women and drinking, you would have no government.
Barry Goldwater.
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