Ian Reynolds
For English pop fans "Enola Gay" is an anti-war song by the English electronic band Orchestral Manoeuvres in the Dark (OMD), the title of which was misunderstood at the time.
This isn't a reference to Russia military manoeuvres in the Caribbean soon, which will include submarines armed with nuclear weapons. Nor is it about the destination which invokes the memory of the Bay of Pigs disaster.
The Bay of Pigs Invasion was a failed military landing operation on the southwestern coast of Cuba in 1961 by Cuban Democratic Revolutionary Front (DRF), consisting of Cuban exiles who opposed Fidel Castro's Cuban Revolution, clandestinely financed and directed by the U.S. government. Castro was a a Marxist–Leninist whose influence by The Soviet Union. in a place just 400km from the United States coastline was of great concern to the US. The operation took place at the height of the Cold War, and its failure influenced relations between Cuba, the United States, and the Soviet Union. Wikipedia.
It's a reference to the insanity of having to kill 140,000 at Hiroshima and 74,000 at Nagasaki to stop a war! And then Japan still didn't surrender immediately. Apparently the US had at least 10 more nuclear bombs ready to go.
Fast forward to today, and the same crazy logic seems to be at play across the globe.
Breaking
Biden Says Trump Left Him ‘No Choice’ as He Moves to Seal Border[Bloomberg]
Nonfarm Payroll Shocks Markets
US Nonfarm Payroll May 2024
A market primed by interest rate cuts in Europe and Canada, had it's hopes dashed by a seemingly strong US employment report.
Non-Farm Payrolls Mislead: The Labor Market Is Weakening; Inflation Is Falling[Forbes]
Nonfarm payroll used to be by far the most important economic release for markets and it's volatility gave traders an awesome afternoon of fun (London time). It was the only thing that could push the long bond futures market linit up or limit down i.e. the market was stopped by the circuit breakers.
Now I don't believe any of the data produced by the Bureau of Labour Statistics.
The constant revisions have made the event a complete waste of time. It's politically motivated changes are a disgrace.
The headline number ( for what it's worth), and from a different report the unemployment rate at 4% and rises in average hourly earnings will make it difficult for the FED to cut on Wednesday. Powell is desperate to cut but his colleagues are increasingly taking the opposite stance.
But you can't say it doesn't move markets !
Gold Dips Below $2,300 as Jobs Dash Fed Bets, China Buying Pause [Bloomberg]
In Focus
Interest Rates Cuts !!
A clearly-signalled 25 basis point cut by the ECB and the presser suggesting that they've been so successful in getting inflation under control, means hope rather than strategy is the driver of monetary policy in one sixth of the world's economy.
Cutting rates while raising inflation projections, is a curious message to capital markets.
Eurozone Consumer Price Index (CPI) YoY
Headline 2.6% YoY in April is still significantly above the 2% target and prices paid seems to be going in the wrong direction currently.
PPI, massively influenced by energy prices, thanks to the Russia | Ukraine war ( you can call it a war now 'cos Putin said) is all over the place, while dire retail sales and lacklustre GDP show an economy in dire straights. Let's hope Ms Lagarde knows what she's doing and CPI will head lower. Otherwise a Euro currency crisis is a distinct possibility.
EU PPI April 2024
EU Retails Sales April 2024
EU GDP Q1 2024
Canada Cuts
The Bank of Canada cut 25 basis points as well. It's in the same boat as the EU in terms of the economic difficulty but also. like Australia, has crazy house price inflation driven by mass immigration.
Press Release [Bank of Canada]
Canada Consumer Price Index (CPI) YoY
Denmark, Sweden & Switzerland Cut
Denmark Starts Easing Rates, Matches ECB’s Quarter-Point Cut
(In May)Sweden becomes second major central bank to cut rates [Morningstar]
(In March) Swiss central bank cuts rates in surprise move, getting ahead of global peers [Reuters]
| Country | Consumer Price Index (CPI) YoY |
|
Denmark |
0.8% |
|
Sweden |
3.9% |
|
EU |
2.6% |
|
Canada |
2.7% |
|
Switzerland |
1.4% |
Goodbye 2% inflation targeting !
US Consumed hammered
US JOLTS April 2024
Weak manufacturing PMIs and strong Non-manufacturing ISMs muddied the waters further.
US Manufacturing ISMs May 2024
US Non-Manufacturing ISMs May 2024
In The Background
Commercial Real Estate
Japan
Bank of Japan to reduce bond buybacks in June meeting- UBS [investing.com]
BoJ meeting friday
China
Finally a quiet week in China
Digital Currencies
Saudi Arabia Joins BIS and China-Led Central Bank Digital Currency Project [US News]
Australia
Australia GDP Q1 2024
RBA deputy points to ‘jobs test’ for interest rates [AFR]
The zombie corporate apocalypse has arrived [AFR]
Billions in CBD office tower sales to test valuations [AFR]
RBA won’t be influenced by Europe and Canada on rate cuts [AFR]
What's Next ?
G7 meeting could bring some unexpected surprises
Biden to be axed after primaries (maybe). It would be the last chance for the Democrats before November's election.
FED meeting Wednesday
This Week's Important Economic Indicators [London time]
