Baltic
Dry Index. 1869 +17 Brent Crude 80.70
Spot Gold 2382 US 2 Year Yield 4.72 unch.
In
the run up to the UK General Election on July 4, the LIR will play its part.
Can any of you seriously say the Bill of Rights could get through Congress today? It wouldn't even get out of committee.
F. Lee Bailey.
Yesterday, as expected, the ECB led the major global central banks in lowering key interest rates. But much anticipated, it underwhelmed the stock casinos, flying in the stratosphere on a wing and a prayer.
Today, the US employment/unemployment numbers
from the Bureau of Lying Labor Statistics.
Crude oil rallies?
Asia shares set for
weekly gain on rate-cut rally
By Rae Wee
June 7, 2024 3:50 AM GMT+1
SINGAPORE, June 7 (Reuters)
- Asian stocks are set to snap a two-week losing streak on Friday after major
central banks kick-started their rate easing cycle this week, adding to
expectations the U.S. Federal Reserve could soon follow suit.
The European Central Bank (ECB)
delivered a well-telegraphed rate cut on Thursday, a day after the Bank of Canada became the
first G7 nation to trim its key policy rate.
The two join Sweden's Riksbank and the Swiss National Bank in
beginning their respective monetary easing cycles, breathing new life into the global risk rally and as bets
grow that the Fed could also cut rates in September.
"You've got two of the
G7 cutting rates ... it certainly opens the door further to the Fed," said
Tony Sycamore, a market analyst at IG. "We're not in the home straight,
but we've certainly rounded the corner.
MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) tracked world stocks higher
and rose 0.3% in early Asia trade. The index was headed for a weekly gain of
nearly 3%.
Hong Kong's Hang Seng Index (.HSI) similarly ticked up 0.14%,
while Chinese blue chips (.CSI300) edged 0.23% higher.
"Equities, in all
likelihood, would rally strongly on that, and that would reflect across the
region. You'll likely see the dollar losing a little bit of strength from
that."
The benchmark 10-year U.S. Treasury yield was last firm at
4.2987%, while the two-year yield rose about two basis points to 4.7386%, after
having clocked six straight sessions of declines.
The decline in yields has come on the back of renewed
expectations of imminent Fed rate cuts, following a slew of data this week
which pointed to an easing of labour market
conditions in the United States.
Markets are now pricing in roughly 50 basis points
of easing from the Fed this year.
Elsewhere, the dollar languished near an eight-week
low against a basket of currencies , and was headed for a weekly-loss of about
0.5%.
More
Asia
shares set for weekly gain on rate-cut rally | Reuters
S&P 500, Nasdaq close slightly down ahead of US payrolls
data
By Chibuike Oguh
June 7, 2024 12:05 AM GMT+1
NEW YORK, June 6 (Reuters) -
The S&P 500 and Nasdaq composite finished a shade lower on Thursday ahead
of a key labor market report, retreating from record highs reached in the
previous session. The Dow was slightly higher.
Benchmark S&P 500 (.SPX) and Nasdaq (.IXIC) rose early and reached
fresh intraday record highs, but then they retreated as technology stocks (.SPLRCT) dipped.
Utilities (.SPLRCU) and industrials (.SPLRCI)were the two other sectors
that dragged the S&P 500 lower. The gainers were led by consumer
discretionary (.SPLRCD)and nergy (.SPNY).
Nvidia (NVDA.O) fell 1.1% and was back to
being the world's third most valuable company the day after it jumped ahead of
Apple (AAPL.O)to take second place.
Investors will watch Friday's crucial U.S. nonfarm payrolls
report. The weekly jobless claims report was the
latest data to indicate labor market easing, which could allow the Federal
Reserve begin cutting interest rates. The European Central Bank delivered its first interest
rate cut since 2019.
----The Dow Jones Industrial Average (.DJI) rose 78.84 points, or 0.20%, to 38,886.17, the S&P 500 (.SPX) lost 1.07 points, or 0.02%, to 5,352.96 and the Nasdaq Composite (.IXIC) lost 14.78 points, or 0.09%, to 17,173.12.
Gains in Nvidia and other
AI-related players have largely driven Wall Street's rally this year, with
the chipmaker accounting for roughly a third of the S&P 500's year-to-date
gains of over 12%.
Traders see a 68% chance of a September rate reduction,
according to the CME's FedWatch tool, and have priced in about two cuts this
year, as per data from LSEG. Forecasters polled by Reuters also expect two cuts.
More
S&P 500, Nasdaq close slightly down ahead of US payrolls data | Reuters
But….
3 signs the US economy is nearing a recession have
flashed in the last week, SocGen says
June
5, 2024
The US economy is edging precariously close to
a recession, and it's flashed a handful of warning signs in just the last week
that suggest a downturn is on the horizon, according to Société Générale.
The European bank has warned
of a recession to hit the US over
the last year, despite many investors and economists remaining bullish on
a soft-landing.
According
to the bank's chief global strategist, Albert Edwards, stocks and the economy
have flashed a number of red flags, with three worrying data points appearing
over the past week.
"Even if Armageddon
looms, I guarantee the investment air will be filled with the sound of bulls
singing their soft-landing siren songs," Edwards said in a recent note to
clients.
He pointed to three signs the
economy is nearing a downturn.
1. Economic growth expectations have been cut
Atlanta
Fed economists cut their expectations for second quarter GDP growth in half
over the last week, down from 3.4% to 1.8% growth.
"US growth expectations
have crashed in the wake of recent weaker-than-expected data," Edwards
said."As GDP growth disintegrates, equity investors should be worried …
that recession might yet arrive after all."
2. Manufacturing activity has slowed
Manufacturing activity, a
"key indicator" of economic growth, is also slowing, Edwards said.
New manufacturing orders contracted in May, and overall manufacturing activity
contracted for the 18th time over the last 18 months, according to the Institute for Supply Management.
"Although many may
dismiss the importance of the manufacturing sector for the overall economy, it
is undeniable that overall GDP ebbs and flows closely with it. No surprise then
that fear of recession is resurfacing," Edwards wrote.
3. Inflation measures are falling
Inflation has cooled from its
highs in 2022. The market-based core personal consumption expenditures deflator
— which is the Fed's preferred measure of inflation, minus sectors like finance
and insurance services — is in steep decline, clocking in at 2.8% for April.
That's a strong sign consumer spending — the key driver of the economy in
recent years — is weakening.
A long retail spending spree
since the waning days of the pandemic helped spur growth to surprising levels,
topping out at almost 5% in the third quarter of 2023, but growth has tumbled since, coming in at 1.3% for the
first quarter, according to the latest revision.
"That 'revenge spending'
has now abated," Edwards said.
The Fed has been walking this
tightrope between lowering inflation and keeping growth from falling off for
two years. While some argue that it's still on track to achieve the soft
landing, others aren't so sure.
SocGen isn't alone in
sounding the alarm, and other economists say that
high interest rates are finally working their way through the economy and
depressing growth.
New York Fed economists see
a 52% chance the
economy could slip into recession within the next 12 months.
3 signs the US economy is nearing a recession have
flashed in the last week, SocGen says (msn.com)
In
other news.
China's exports rise
solidly, but slower imports temper outlook
By Joe Cash
June 7, 2024 5:18 AM GMT+1
BEIJING, June 7 (Reuters) - China's exports grew
more quickly and for a second month in May, suggesting factory owners are
managing to find buyers overseas and providing some relief to the economy as it
battles to mount a durable recovery.
The jury is still out, however, on whether the
export sales are sustainable while a protracted property crisis has led to
persistent weakness in domestic demand - a factor highlighted again in last
month's imports figures.
Outbound shipments from the
world's second-largest economy grew 7.6% year-on-year in value in May, customs
data showed on Friday.
But imports increased at a slower 1.8% pace, from a 8.4% jump in
the previous month, highlighting the fragility of domestic consumption.
The export figure beat a forecast 6.0% increase in a Reuters poll of economists and a 1.5%
rise seen in April, but was likely also aided by a lower base of comparison,
after rising interest rates and inflation in the U.S. and Europe squeezed
external demand in the previous year.
Friday's shipments data
possibly also suggests a global cyclical upturn in the electronics sector is
helping China's sales of components and finished manufactured goods.
Over recent months, a flurry of data has shown different parts
of the $18.6 trillion economy recovering at varying speeds, heightening
uncertainty about the outlook.
While first quarter growth blew past
forecasts and strong March export and output data suggested
improving global demand might aid officials' efforts to get the
economy back on a more even keel, more recent indicators reflecting
soft domestic consumption have eroded much of that earlier optimism.
A protracted property sector
crisis remains the biggest drag on China's economy, with low investor and
consumer confidence hurting domestic consumption and undermining business
activity.
Adding to the worries for policymakers, both the new orders and
new exports orders sub-indices of a factory owners survey run by
the National Bureau of Statistics for May tipped back into contraction after
two months of growth.
China's
exports rise solidly, but slower imports temper outlook | Reuters
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.
Monetary policy decisions
6 June 2024
The Governing Council today
decided to lower the three key ECB interest rates by 25 basis points. Based on
an updated assessment of the inflation outlook, the dynamics of underlying
inflation and the strength of monetary policy transmission, it is now appropriate
to moderate the degree of monetary policy restriction after nine months of
holding rates steady. Since the Governing Council meeting in September 2023,
inflation has fallen by more than 2.5 percentage points and the inflation
outlook has improved markedly. Underlying inflation has also eased, reinforcing
the signs that price pressures have weakened, and inflation expectations have
declined at all horizons. Monetary policy has kept financing conditions
restrictive. By dampening demand and keeping inflation expectations well
anchored, this has made a major contribution to bringing inflation back down.
More
Monetary policy decisions (europa.eu)
Interest rate cut for euro area
but no commitment to more
June
6, 2024
The 20 countries using the euro currency have seen interest
rates cut from record highs following progress in the battle against inflation
over the past two-and-a-half years.
The Frankfurt-based European Central
Bank (ECB) said on Thursday it was "appropriate" to trim its main
deposit rate from 4% to 3.75%.
It followed an assertion last month
by its president, Christine Lagarde, that the pace of price increases was now
"under control".
But the Bank declared in a statement
that the battle was not won - signalling data-driven caution on future policy
decisions in the months ahead.
Its staff even revised upwards their
forecasts for inflation this year and next.
"The governing council will
continue to follow a data-dependent and meeting-by-meeting approach to
determining the appropriate level and duration of restriction," the ECB
said, adding: "The governing council is not pre-committing to a particular
rate path."
The ECB first moved to deal with
surging inflation in the wake of Russia's invasion of Ukraine that saw its
main measure surge above 10% as energy and other key commodity costs rose
sharply across Western economies.
The Bank's decision to cut - ahead of
the US Federal Reserve and the Bank of England - was widely
anticipated due to the guidance it had given and confidence the president had
already expressed in the likely path for inflation ahead.
But some economists and financial
market commentators believe the ECB has jumped the gun.
The eurozone's last reading for
inflation, in May, rose from 2.4% to 2.6% and there is a mixed picture for
price stability across the bloc with the highest readings coming from those
member states in the east.
The Bank's new projections saw
inflation averaging 2.4% this year and 2.2% in 2025.
More
Interest rate cut for euro area but no commitment to more (msn.com)
Covid-19 Corner
This section will continue until it becomes unneeded.
Updated Covid-19 Vaccine
Targeting JN.1 Recommended By FDA Panel
Jun
5, 2024,08:14pm EDT
An FDA
advisory committee recommended the development of a new Covid-19 vaccine at its meeting on Wednesday. According to the
panel, vaccine manufacturers should design updated vaccines to target the JN.1
variant of SARS-CoV-2. Ideally, these updated vaccines will be available in the
fall.
The Vaccines and Related Biological Products Advisory
Committee of the FDA
evaluated the effectiveness of the current vaccines and discussed the need for
a new vaccine formulation. Representatives from Moderna, Pfizer-BioNtech, and
Novavax presented data about the protection offered by current vaccines against
emerging variants and the potential benefits of vaccines specifically targeting
these new strains.
Following the
presentations and a period of public comment, the panel voted unanimously to
recommend that the 2024-2025 Covid-19 vaccine should be a monovalent vaccine
based on the JN.1 variant of SARS-CoV-2.
History of Covid-19 vaccines
To more fully
understand today’s recommendation, it’s useful to review the history of today’s
Covid-19 vaccines. In December 2020, the FDA provided emergency use
authorization for mRNA-based vaccines produced by Moderna and Pfizer-BioNTech.
Both companies designed their vaccines to target the ancestral, or original,
strain of SARS-CoV-2. The FDA granted EUA to the Novavax vaccine in July 2022.
Unlike the Moderna and Pfizer-BioNTech vaccines, this vaccine used a
protein-based platform.
Updated Covid-19 Vaccine Targeting JN.1 Recommended By
FDA Panel (forbes.com)
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.
World’s biggest solar farm goes online, big enough to
power a country
June 5, 2024
The world’s biggest solar plant has
come online in China, capable of powering a small country with its annual
capacity of more than 6 billion kilowatt hours.
The facility in a desert
region of the north-west province of Xinjiang covers 200,000 acres – roughly
the same area as New York City.
The 5GW complex, which was
connected to China’s grid on Monday, is powerful enough to meet the
electricity demands of a country the size of Luxembourg or Papua New Guinea.
China has
led the world in solar
power adoption, boosting its
capacity in 2023 by more than 50 per cent. The new solar farm overtakes the
Ningxia Teneggeli and Golmud Wutumeiren solar projects, which are both also in
China, to become the largest in the world.
A recent report by the
International Energy Agency (IEA) described China’s drive towards renewables as
“extraordinary”, with the country commissioning as much solar capacity last
year as the entire world did in 2022.
“China accounts for almost 60
per cent of new renewable capacity expected to become operational globally by
2028,” the report stated.
“China’s
role is critical in reaching the global goal of tripling renewables because the
country is expected to install more than half of the new capacity required
globally by 2030. At the end of the forecast period, almost half of China’s
electricity generation will come from renewable energy sources.”
More
World’s biggest solar farm goes online, big enough to
power a country (msn.com)
Next, our
latest new section, the world global debt clock. Nations debts to GDP compared.
World Debt
Clocks (usdebtclock.org)
Another weekend and a weekend to ponder on interest rates, the US and global economy, our strange global weather, the missing Antarctic ice, the EU elections, the UK July 4th general election and a repeat of Joe against The Don. Have a great weekend everyone.
Nothing is so admirable in politics as a short memory.
John Kenneth Galbraith.
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