Baltic
Dry Index. 1948 +00 Brent Crude 84.14
Spot Gold 2322 US 2 Year Yield 4.75 +0.08
In
the run up to the UK General Election on July 4, the LIR will play its part.
The trouble with our Liberal friends is not that they're ignorant; it's just that they know so much that isn't so.
Ronald Reagan.
The great stocks disconnect AI tech bubble, largely bubbles on, but raises the question, to me at least, just how bad will the fallout be when it bursts?
Hopefully, not a question to be answered today, but one day it will be answered.
Today, another worrying dose of global reality in the LIR.
Rising global trade tariffs push the global economy towards a return to the 1930s.
Yet another recession signal for the US economy.
Now, even buy now pay later debt traps are starting to fail.
What else could possibly go wrong?
Your Evening
Briefing: S&P 500 Hits 30th Record of 2024 as Megacaps Rally
June 17,
2024 at 10:27 PM GMT+1
A rally in several large technology companies drove stocks to all-time highs, with some prominent Wall Street strategists rushing to boost their targets even as many hedge funds grow increasingly cautious.
The S&P
500 hit its 30th record this year, defying concerns about narrow breadth that
could make the market more vulnerable to surprises. As traders geared up for
retail-sales data and a slew of Federal Reserve speakers, Treasuries fell amid
a flurry of high-grade corporate bond sales that exceeded $21 billion, led by
Home Depot. That’s ahead of Wednesday’s holiday. Here’s your markets wrap.
More
Bloomberg
Evening Briefing: S&P 500 Hits 30th Record of 2024 as Megacaps Rally -
Bloomberg
Asia-Pacific markets rebound as
Wall Street rallies overnight; Australia rate decision on tap
Asia-Pacific markets
rebounded on Tuesday as Wall Street surged overnight, with investors awaiting
the Reserve Bank of Australia’s interest rate decision.
The RBA is expected
to hold rates at 4.35%, but investors will be watching the language used in its
monetary policy statement.
In a preview note,
ING stated that “inflation more broadly is heading in the wrong direction, and
that inflation is broadly based.” Australia’s headline inflation crept up to
3.8% in April, from a low of 3.4% in December 2023.
“Above all, we need
to see month-on-month inflation rising at a significantly slower pace, or
inflation is going to veer further off course over the second half of the
year,” the analysts add.
Australia’s S&P/ASX 200 gained
0.96% ahead of the RBA decision.
Japan’s Nikkei 225 rose
1.05% after plunging almost 2% on Monday, while the Topix was 0.74% higher.
On Tuesday, Reuters reported that
Bank of Japan Governor Kazuo Ueda told the country’s parliament that the
central bank could raise rates in July, depending on the economic data
available at the time.
Japanese automaker Toyota has
re-elected Akio Toyoda as its board chairman, disregarding two proxy advisers’
recommendation to vote against his re-election.
South Korea’s Kospi climbed
0.84%, led by gains in chipmakers Samsung Electronics and SK Hynix, which rose
about 2.3% and 3%, respectively.
Automaker Hyundai also hit a fresh
record, gaining about 3.05% on news that it plans to list its India
unit in Mumbai.
Hong Kong’s Hang Seng index advanced
0.29%, while mainland China’s CSI 300 inched up 0.22%.
Overnight in the U.S., the S&P 500 rose to
close at a fresh record as Wall Street looked to build on last week’s gains.
The index added 0.77% to finish at
5,473.23, while the Nasdaq
Composite surged 0.95%. The Dow Jones Industrial Average added
0.49%, to snap a four-day losing streak.
Asia stock
markets live: RBA decision, S&P record high (cnbc.com)
S&P 500 futures are little changed as
investors await May retail sales data: Live updates
UPDATED TUE, JUN 18 2024 8:47 PM EDT
S&P 500
futures are near flat Monday night after a winning day on Wall Street as
investors gear up for May retail sales data.
Futures linked to the broad
market index inched higher by 0.05%, while Nasdaq 100 futures ticked
down by 0.07%. Dow Jones
Industrial Average futures rose
59 points, or 0.15%.
Those moves follow a positive
session on Wall Street that propelled the S&P 500 higher
by nearly 0.8%, while the Nasdaq Composite finished
with a gain of almost 1%. Both indexes reached all-time highs during the
session and closed at records. The 30-stock Dow advanced
about 0.5% to end four days of losses.
“Investors are basically feeling
the trend is my friend until it ends,” said Sam Stovall, chief investment
strategist at CFRA Research. “They don’t really see anything at this point that
is going to cause this upward move to end.”
Tech stocks performed well in the
session, helping the tech-heavy Nasdaq outperform and aiding the broader
S&P 500′s rise. Notably, Broadcom climbed
more than 5%, while Apple jumped
around 2%.
Nvidia touched
an all-time intraday record as State Street said the chipmaker would
likely see a weighting of more than 20% in
the rebalance of its popular exchange-traded fund focused on
tech. But the stock rolled over, ending the day down 0.7%. Despite that
pullback, shares are still up nearly 165% on the year.
Looking ahead, investors will
closely watch retail sales data for May due Tuesday morning for insights into
the health of the consumer. Economists polled by Dow Jones forecasted growth of
0.2% from April.
Other economic reports on topics
like industrial production and business inventories are also expected in the
morning. Several Federal Reserve officials including Boston Fed President Susan
Collins and Richmond Fed President Tom Barkin are expected to speak at events
across the country throughout the day.
Stock market today: Live updates (cnbc.com)
In other news, even buy now pay later is
starting to fail.
‘Heartbroken’: Major buy-now pay-later firm collapses
after failing to find a buyer
MONDAY 17 JUNE 2024 3:35 PM
Buy-now pay-later firm
Laybuy has collapsed into receivership today after efforts to find a rescue
buyer failed.
The Kiwi fintech firm, which launched in 2017
and once boasted around 766,000 customers across the UK, Australia and New
Zealand, put itself up for sale in April and was looking to delist from the New Zealand’s
junior stock exchange Catalist, City A.M. previously revealed.
However, in a statement today founder and
managing director Gary Rohloff confirmed a buyer had failed to emerge and the
payments company had voluntarily called in receivers in New Zealand.
“I am absolutely heartbroken at today’s
decision to request the appointment of receivers to the Laybuy Group,” Rohloff
said.
“This is a devastating time for the
Laybuy team, and I will be doing everything I can to support them as we go
through this process.”
Rohloff pointed to the “economic
downturn” and a subsequent squeeze on the retail sector in New Zealand and the
UK as the reasons for the firm’s collapse.
A source said the process was being
run separately in the UK and a decision had yet to be made on who would handle
the winding up of the company. Filings on Friday show law firm Pinsent Masons
was handling the process of appointing an administrator.
The move is likely to leave Laybuy’s
70 global staff without jobs and marks a sharp fall for a company which was
plotting expansion in the UK as recently as 18 months ago.
Speculation had been swirling around
the future of the company after it disabled all of its payment products to
users last Wednesday, with a statement on its website claiming it is
“undergoing maintenance and will be back soon”.
It is unclear how the collapse will
now impact customers that have borrowed through the platform in order to pay
for goods.
The company was a beneficiary of the
boom in buy-now pay-later through the pandemic and fetched a value of some
$358m (£184m) when it raised $80m (£40m) on the Aussie stock market in 2020.
Last January, the company scrapped
its Sydney listing after a slump in its share price and said it would swap to
the small business-focused market Catalist.
---- BNPL firms
have also been embroiled in a wider slowdown across the tech sector amid rising
costs and a dearth of funding.
Swedish fintech Klarna is
the UK’s largest BNPL provider with some 18m customers, followed by Clearpay
and Zilch. Big banks like HSBC, Natwest
and Virgin Money have also attempted to cash in on the boom in demand
for interest-free instalment loans.
Moody’s analysts warned in a
report last November that “few BNPL companies will remain independent”
as some are acquired and others cease operations due to the growing headwinds.
'Heartbroken': Major buy-now pay-later firm collapses after failing to find a buyer (cityam.com)
Finally, in commodities and EU tariff news, China says anything EU can do, we can do too. Madness leading to a return of the 1930s.
China opens
tit-for-tat anti-dumping probe into European pork
By Joe Cash June 17,
2024 12:02 PM GMT+1
BEIJING, June 17 (Reuters) - China has opened an
anti-dumping investigation into imported pork and its by-products from the
European Union, a step that appears mainly aimed at Spain, the Netherlands and
Denmark, in response to curbs on its electric vehicle exports.
The investigation announced by China's commerce
ministry on Monday will focus on pork intended for human consumption, such as
fresh, cold and frozen whole cuts, as well as pig intestines, bladders and
stomachs. The probe will begin on June 17.
It was prompted by a
complaint submitted by the China Animal Husbandry Association on June 6 on
behalf of the domestic pork industry, the ministry said.
Following the European Commission's June 12 announcement that it
would impose anti-subsidy
duties of up to 38.1% on imported Chinese cars from July, global
food companies have been on high alert for retaliatory tariffs from China.
The state-backed Global Times newspaper first reported late last
month that Chinese firms planned to ask authorities to open an anti-dumping
investigation into some European pork products, citing an unidentified
"business insider".
That was followed by a
second report in the same outlet on June 8 requesting officials look into
European dairy imports.
Chinese authorities have previously hinted at
possible retaliatory measures through state media commentaries and interviews
with industry figures.
A spokesperson for the European Commission said the
bloc was not worried about China opening its investigation and told reporters
the EU would intervene appropriately to ensure the investigation complied with
all relevant World Trade Organisation rules.
Spain, however,
called for negotiations to avoid tariffs on its pork exports to China.
The EU accounts for more than half the roughly $6 billion worth
of pork China imported in 2023, according to customs data, around a quarter of
which was from Spain alone.
Second- and third-ranking, the Netherlands and Denmark last year
exported to China pork products worth $620 million and $550 million
respectively.
More
China opens tit-for-tat anti-dumping probe into European pork | 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.
This spot-on recession
indicator is flashing red
June 15, 2024
A “recession is underway,” and we’re
just waiting for corroboration by the National Bureau of Economic Research, the
semi-official arbiter of when recessions begin.
That’s the confident prediction I
received a few days ago from Jack Schannep, former editor of the TheDowTheory.com investment
newsletter. He bases his conviction on an indicator he created in 2000 called
the “Schannep Recession Indicator” (SRI), which corresponds to trends in the
U.S. unemployment rate.
According
to Manuel Blay, Schannep’s successor, in the U.S. since 1946 there have been 12
recessions; “all of them were spotted by the SRI.” Blay adds that the SRI
issued only one false signal — in October 1959, six months prior to the
recession that commenced in April 1960. (The SRI’s track record since the late
1940s is summarized here.)
The SRI is based on the
three-month moving average of the unemployment rate. A recession signal is
triggered when it rises by at least 0.4 percentage points from that moving
average’s prior cyclical low. The SRI’s latest signal was triggered on June 7
with the report of May’s unemployment rate of 4.0%, which brought the
three-month moving average to 3.9%. That’s 0.4 percentage point higher than
where the moving average stood in April of last year.
Schannep says he developed
his indicator after investigating news media reports that a recession occurs whenever the U.S. unemployment rate
rises by more than three-tenths of a percentage point. Schannep found this to be close, with the provisions
that the threshold is 0.4 of a percentage point; the focus is on the
unemployment rate’s three-month moving average, and the comparison is to that
moving average’s prior cyclical low.
There is a similarity between the SRI and the so-called Sahm Rule, introduced in 2019 by Claudia Sahm, a former Federal Reserve economist. There are two major differences, however: first, the Sahm Rule doesn’t trigger until the three-month moving average rises by at least 0.5 of a percentage point, in contrast to 0.4 for the SRI. Second, the Sahm Rule compares the latest three-month average to its trailing 12-month low, while the SRI compares it to the most recent cyclical low — which could be more than 12 months in the past. The Sahm Rule has not indicated a recession is imminent or underway. Still, if a U.S. recession is not already here, it’s near.
You might wonder why we even need an indicator
to predict when the National Bureau of Economic Research will declare that a
recession has begun. Why not just rely on the NBER to tell us? The
answer is that the NBER often takes many months, sometimes more than a year, to
determine when a recession has begun. Sometimes the recession has been over by
the time the NBER verifies that it began — the recessions of 1990-1991 and
2001, for example.
More
This spot-on recession indicator is flashing red (msn.com)
The cyclical 3-month average low of 3.5% for the unemployment rate
was during Feb (3.6%)- Mar (3.5%)- Apr (3.4%) of 2023. The current
3-month average rose to 3.9% during Mar (3.8%)- Apr (3.9%)- May (4.0%) of 2024 for
a 0.4% INCREASE
The Current Status: is that the
threshold if a 0.4% gain now signals
that a recession is underway. The May 2024 level was 4.0%. Expect the NBER to
report later this year that the recession was underway in May of 2024.
Covid-19 Corner
This section will continue until it becomes unneeded.
Today, interesting news from the southern hemisphere winter respiratory season. A hint for the northern winter to come?
Wellington
Hospital opens first Covid-19 ward in three years, warns of spike in
respiratory bugs
June 17, 2024
Wellington Regional Hospital has
warned the respiratory bug season is putting demand on its services after
opening a Covid-19 ward for the first time in three years.
Health New Zealand Te Whatu Ora
Capital, Coast and Hutt Valley has reported an increase in Covid-19 cases in
recent weeks.
Hospital and specialist
services group director operations Jamie Duncan said a dedicated ward was
opened to accommodate Covid-19 inpatients from May 31 to June 11.
This is the first time the
hospital has had a dedicated Covid-19 clinical area since 2021, Duncan said.
“While a
dedicated ward for Covid-19 inpatients is no longer required, we continue to
see increasing numbers of people testing positive for respiratory illnesses.
“Respiratory bug season
places additional demand on our services every year, and our services -
particularly our child health services - plan accordingly.”
Covid-19 modeller Professor Michael Plank has said the
country’s sixth wave is likely close to its peak but a tricky new variant already accounting for a
third of cases could see it roll on into winter.
The
latest Ministry of Health figures showed there were 5230 reported cases of the
virus nationally over the week to June 9, along with 354 cases in hospital and
20 virus-attributed deaths.
Duncan recommended that all New
Zealanders take precautions over the winter months to protect themselves and
others, particularly anyone over the age of 65, from getting Covid-19.
“This includes receiving an
additional Covid-19 vaccine for those who are eligible, staying away from
vulnerable friends and family if you are unwell, wearing a face mask in closed,
crowded, or confined spaces, staying home if you feel sick and testing for
Covid-19 and isolating for five days if you test positive.”
Duncan said antivirals were free for
people over the age of 65, Māori and Pacific people over the age of 50, people
with compromised immune systems and those with long-term health conditions.
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.
Energy
prices in France turn negative as surging renewable output takes nuclear plants
offline
June
15, 2024
Day-ahead energy prices in France fell into negative
territory amid surging renewable power production, Bloomberg reported.
The prices, which are locked in
before their operating day, fell to a four-year low of -€5.76 a megawatt-hour
in an Epex Spot auction.
While soaring wind and solar
generation are to blame, demand is also expected to fall between through the
weekend. The imbalance has pressured a state-owned utility company Electricite
de France to shut off a number of nuclear reactors. Already, three plants were
halted, with plans to take three others offline.
According to Bloomberg, this isn't
infrequent and can commonly occur on weekends in France. It's also a
pan-European phenomenon, with reactor shutdowns occurring in Spain and the
Scandinavian region.
Across the continent, a push to
decarbonize energy grids has accelerated a boom in renewable infrastructure.
Yet, without the battery technology and investment to store the energy surplus,
it's creating pricing inefficiencies.
Negative prices have also hit
Germany, where solar inventory has outpaced demand, SEB Research reported in May.
The situation in France is
different in that the rollout of renewable power has been slower than in other
countries in the region, Reuters said. Paris
has installed around 45 gigawatts of wind and solar capacity, and is behind
European Commission targets.
A bigger slowdown could be on
the horizon amid recent political headwinds, as France's far-right looks set to
win in domestic elections.
If the National Rally party
wins, it has pledged to slash renewable subsidies and end the wind power
industry's expansion.
Next, our
latest new section, the world global debt clock. Nations debts to GDP compared.
World Debt
Clocks (usdebtclock.org)
Compromise: An agreement between two men to do what both agree is wrong.
Lord Edward Cecil.
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