Baltic
Dry Index. 1881 +12 Brent Crude 79.85
Spot Gold 2295 US 2 Year Yield 4.87 +0.15
In
the run up to the UK General Election on July 4, the LIR will play its part.
The best argument against democracy is a five-minute conversation with the average voter.
Winston Churchill.
With
results coming in from the EU elections, it’s already clear that the next five
years in the European Union will be nothing like what went on before.
Brexit
justified, will continental Europe reform itself and finally drop trying to
become the EUSSR?
Bizarrely,
French President Macron has called for Parliamentary elections for June 30 and
July 7, straddling the UK general election held on July 4th.
In
Belgium, the victory of the right has caused the Belgian Prime Minister to
resign. Belgium being Belgium, nothing there happens very fast and he might
still be in office come Christmas as the Belgian Parliament seeks a
replacement.
Greater
clarity tomorrow.
Will
the US central bank make another policy error this week?
Far-right
advances in EU election, France calls snap national vote
By Jan Strupczewski, Sudip Kar-Gupta and Ingrid Melander
BRUSSELS, June 9 (Reuters) -
Gains by the far-right in voting for the European Parliament on Sunday prompted
a bruised French President Emmanuel Macron to call a snap national election and
added uncertainty to Europe's future political direction.
While the centre, liberal and Socialist parties were set to
retain a majority in the 720-seat parliament, the vote dealt a domestic blow to
the leaders of both France and Germany, raising questions about how the
European Union's major powers can drive policy in the bloc.
Making a risky gamble to try
to reestablish his authority, Macron called a parliamentary election,
with the first round on June 30.
Like Macron, German Chancellor Olaf Scholz also endured a painful night where
his Social Democrats scored their worst result ever, suffering at the hands of
the mainstream conservatives and hard right Alternative for Germany (AfD).
Meanwhile, Italian Prime Minister Giorgia Meloni saw her position
strengthened by her arch-conservative Brothers of Italy group winning
the most votes, exit polls showed.
A rightwards shift inside the
European Parliament may make it tougher to pass new legislation that might be needed to
respond to security challenges, the impact of climate change or industrial
competition from China and the United States.
However, exactly how much clout the euro-sceptic nationalist
parties will wield will depend on their ability to overcome their differences
and work together. They are currently split between two
different families, and some parties and lawmakers for now lie outside these
groupings.
More
Far-right
advances in EU election, France calls snap national vote | Reuters
European markets head for lower open after surge
for right-wing parties in EU election
LONDON — European stocks are expected to open
lower Monday as traders react to initial results from the EU Parliament
elections which suggest far-right parties have surged in popularity.
The U.K.’s FTSE index
is seen 57 points lower at 8,193, Germany’s DAX 45
points lower at 18,507, France’s CAC 40 down
45 points at 7,952 and Italy’s FTSE MIB 60
points lower at 34,629, according to IG.
Regional markets will be focused on
the results of EU parliamentary elections, which took place over the last few
days. Initial results show populist, far-right parties could have a bigger hand
in European policymaking over the next five years.
Regional investors will also be looking ahead to
the next U.S. inflation data on Wednesday, as well as the next meeting of the
U.S. Federal Reserve. Both come after a stronger-than-expected U.S.
jobs report last Friday revealed hiring and wage growth picked
up in May.
That adds to the narrative the Fed
doesn’t have to rush to lower interest rates. Traders don’t
expect the Federal Open Market Committee to cut rates at its meeting this week
or the next meeting in July.
Overnight, Asia-Pacific markets
were mixed, with a few markets are closed for a holiday Monday, including
Australia, mainland China, Hong Kong and Taiwan. Meanwhile, U.S.
stock futures were little changed Sunday night after a winning
week.
European markets react to surge for right-wing parties in EU election (cnbc.com)
France’s Macron
calls for snap election after losing big to the far right in EU vote
French President Emmanuel Macron on Sunday said he
would dissolve the country’s parliament and call for a new legislative
nationwide vote after suffering a heavy defeat at EU elections.
The shock
announcement came after exit polls published by public
broadcaster France TV indicated that Marine Le Pen’s far-right National Rally
(Rassemblement National, or RN) is set to win around 31.5% of the vote,
compared to 14.5% for Macron’s Renaissance party.
“I will ... not be able, at the end of this day,
to act as if nothing had happened,” Macron said in a TV address, according to a
translation by CNBC.
The first round of
the parliamentary election will take place on June 30, with the second round on
July 7, Macron said.
After requesting
that Macron call an election, Le Pen welcomed the news, saying on X: “We are
ready for it.”
Calling the
legislative election is a risky move by Macron, who could be left with no
control over France’s domestic issues if Le Pen’s RN wins a parliamentary
majority. Macron’s presidency isn’t due to end until 2027 and he’s unable to
stand for a third term.
“By unexpectedly
bringing things to a head in a new parliamentary election, Macron may hope to
revive the fortunes of his party,” Holger Schmieding, chief economist at
Berenberg Bank, said in a note on Sunday evening. “However, barring a major
swing in sentiment, his party looks set to lose heavily in the parliamentary
elections.”
He added that, for a “fiscally challenged
France,” new elections add uncertainty that could cause some concern for
markets.
Bardella in the spotlight
RN is led in Europe
by Jordan Bardella, 28, who has made it his mission to make the far right
acceptable to France’s youth and beyond. In an Ipsos poll published in May, 32% of those
questioned said they would be satisfied if Bardella became president in
2027 (above Le Pen, who came in second with 31%).
The nationalist and
populist party’s campaign pledges included to “restore” order to France, close
“radical” mosques and stop what it calls the “migratory submergence.” It also
pledged to reduce VAT on energy bills, invest in nuclear energy and reduce the
retirement age to 60, “for those who start working early.”
More
France's
Macron calls for snap election after losing big to the far right in EU vote
(cnbc.com)
How the Fed is making a massive mistake | Opinion
Opinion
by Robert Reich June 9, 2024
The consensus among economists is
that this morning’s jobs report, showing that the United States added a whopping
272,000 jobs in May, will cause the Fed to leave interest rates unchanged at
their current high level when the Fed meets next week.
Fed officials still fear the specter
of inflation. Average hourly earnings rose 0.4 percent in May from April, and
4.1 percent from a year ago.
But it would be a
mistake for the Fed to postpone reducing interest rates. Five reasons:
・The unemployment rate for May ticked up to 4 percent for the first time
since January 2022. The household survey (which is more indicative of where the
economy is than the business survey) paints a picture of an economy that could
still tip into recession.
・Consumer spending (especially by lower-income consumers) is slowing.
・Wage growth has not been a major cause of inflation over the past
several years. A bigger cause has been corporate monopoly power to raise prices
and keep them high. That’s been particularly true in the food and energy
sectors. High interest rates won’t reduce this monopoly power.
・The job trend isn’t as robust as some may think. For example, March’s
and April’s job reports were revised downward by 15,000 jobs in all.
・Finally, high interest rates are hurting Americans with car loans,
student loans, credit-card debt, and mortgage debt. Many of these Americans
have exhausted their post-pandemic savings. Most are low income. It’s unfair to
put the burden of continuing to fight inflation on them.
How the Fed is making a massive mistake | Opinion
(msn.com)
Citi switches first Fed rate cut call to September
from July after hot jobs data
June 7, 2024
Citi made an
adjustment to its forecast for the U.S. Federal Reserve's monetary policy,
moving its expectation for the initial rate cut from July to September.
This change
comes in response to the May jobs report, which revealed an addition of 272,000
new jobs, which crushed consensus estimates.
The brokerage
and research firm now anticipates a total of 75 basis points in rate reductions
to occur in September, November, and December.
"But the
jobs report does not change our view that hiring demand, and the broader
economy, is slowing and that this will ultimately provoke the Fed to react with
a series of cuts beginning in the next few months," Citi economists said.
The household
survey, a component of the broader employment report, suggests a less
optimistic outlook, with household employment falling by 483,000.
This decline
contributed to the unemployment rate's rise to 4.0%, even as labor force
participation decreased.
Following
today's jobs report, Fed swaps no longer fully price in a rate cut before
December, according to Bloomberg's data.
Citi switches first Fed rate cut call to September
from July after hot jobs data (msn.com)
There are few ironclad rules of diplomacy but to one there is no exception. When an official reports that talks were useful, it can safely be concluded that nothing was accomplished.
John Kenneth Galbraith
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.
Walmart store
closures are a warning sign of retail apocalypse with other chains also facing
threat, expert says
One
state has seen five Walmarts close their doors
· Updated: 11:22 ET,
WALMARTS are closing across the country - and retail experts say
the cuts are signals of a bleak future for shoppers.
The multi-million dollar
corporation has closed nine stores so far this year,
which could be a warning sign for other retail giants.
Walmart, which operates 5,000 stores in the
US, is also reportedly laying off hundreds of corporate employees as the company urges remote
workers to come into work.
Retail analyst Neil Saunders told Yahoo that Walmart's closures in 2016,
captured by retail photographer
Nicholas Eckhart, were the beginning of a pattern in store cuts.
"The blunt truth is that while stores remain a vital part
of the retail mix, they are not quite as relevant as they used to be," the
expert told the outlet.
"Walmart's decision is part of a larger shift that will be
played out across all parts of the retail sector over the coming year and
beyond."
Saunders' prediction turned out to be largely true as nine
Walmarts are closing this year across four states.
The first two stores to close were in California - in San Diego and El Cajon on
February 9.
----A third California store closed on March 29 in West Covina.
A Walmart spokesperson told Los Angeles-based KTLA that the store had underperformed.
"We have nearly 5,000 stores across the U.S. and
unfortunately some do not meet our financial expectations," Walmart told
the outlet.
More
Why the Recession Still Isn’t Here
June
7, 2024
The recession,
predicted by business executives, economists, and investors, refuses to show
up.
Steady hiring
continues to fuel consumer spending and, in turn, an economic expansion unlike
any the U.S. has seen. Employers added 2.75 million jobs over the last 12
months, including 272,000 in May, the Labor Department said Friday.
The
unemployment rate has been at or below 4% for 30 months, something that last
occurred during the Vietnam War in the late 1960s and the Korean War in the
early 1950s.
Of course,
just because everyone who predicted a recession has been wrong doesn’t mean
they won’t eventually be right. Though the unemployment rate remains low, it’s
risen from its postpandemic extremes: The unemployment rate ticked up to 4.0%
last month from 3.9% in April. It was as low as 3.4% in April 2023.
Already, the
rate at which companies hire workers has fallen to levels last seen seven years
ago. Job vacancies, which soared during the pandemic, have returned to
prepandemic levels; if they fall much lower, a higher unemployment rate
beckons.
So far, labor
market imbalances have resolved themselves without a recession.
If the economy
is a mountain climber on a ridge, “there are times when that ridge is extremely
broad and even a major event isn’t going to knock the economy off the ridge,”
said Glenn Kelman, chief executive of real-estate brokerage Redfin.
Now, “it feels
like the ridge has gotten much narrower,” he said.
Two years ago,
the Federal Reserve jacked up interest rates at the fastest pace in decades to
combat inflation that it initially misdiagnosed as likely to be short-lived.
Companies were scrambling for workers, offering large raises and bonuses, and
prices were soaring. Investors, economists and some Fed officials thought
higher unemployment would probably be needed to bring supply and demand back
into balance.
Businesses
aren’t shedding workers, though pressures to do so will mount if a longer
period of higher rates erodes margins and profits slump.
Fed officials
are set to hold interest rates steady at their two-day meeting next week. They
raised their benchmark rate last year to a range between 5.25% and 5.5%, the
highest since 2001. Central banks in Canada and Europe began cutting rates
this past week, but growth has been stronger in the U.S.
The Fed is trying to
balance the risk of cutting too soon and allowing stubborn inflation to persist
with the hazard of keeping rates too high and triggering a slowdown that may
not be needed to finish their inflation fight.
More
Why the Recession Still Isn’t Here (msn.com)
Covid-19 Corner
This section will continue until it becomes unneeded.
The FDA tells Covid-19 vaccine makers to update shot
to target the variant currently in circulation
June 7, 2024
The US Food and Drug Administration announced Friday that it
had advised the makers of the Covid-19 vaccines to formulate their new shots to
be a better match for the JN.1 lineage of the coronavirus. The JN.1 version of
the virus, along with its descendants KP.2 and KP.3 are the most common strain
of the virus that are getting people sick right now, according to
the US Centers for Disease Control and Prevention.
The FDA’s committee of independent advisers voted unanimously Wednesday to recommend that the
agency tell vaccine manufacturers to update the Covid-19 shots for the fall.
The FDA
told the advisory committee Wednesday that studies have shown that the
currently available Covid-19 vaccines appear to be less effective against
the variants that are now in circulation. When manufacturers updated their
vaccines last year to better match the variants that were in circulation then,
the reformulated vaccines seemed to offer better protection, the FDA said.
Covid-19 cases are relatively
low right now. Only 3% to 4% of people who are getting tested are positive for
the virus, the CDC told the FDA’s vaccine advisers this week. By
comparison during the height of the pandemic, rates were at 30%. Hospitalization
rates are also currently the lowest they have been since March 2020, the CDC
told the committee.
Many people in the US have some
protection against the virus through vaccination or prior infection, but that
protection wanes over time.
In just the fall and winter months
last season, Covid sent more than half a million people in the US to the
hospital and killed 40,000 people, according to data presented at the meeting.
The people most likely to get
seriously ill or die were unvaccinated, studies show, and among the
children who were hospitalized, half had no underlying conditions.
Covid vaccine makers Pfizer, Moderna
and Novavax said their new products should be ready by the fall.
The challenge may now be on how to
convince people to get the Covid-19 vaccine. Only about 25% of adults have been
vaccinated with the most recent version of the vaccine.
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.
No update today. Normal service
resumes tomorrow.
Next, our
latest new section, the world global debt clock. Nations debts to GDP compared.
World Debt
Clocks (usdebtclock.org)
Whatever
starts in California unfortunately has an inclination to spread.
Jimmy Carter.
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