Trump's assassination attempt, Biden's Parkinsons, a global IT event and the media's fixation with J.D. Vance that no-one had heard of a week ago, distracts from this week's pivotal event.

Chair Powell finally pivoted in public.

Inflation is no longer his primary concern as employment, his other mandate, is getting all of his attention. And his timing is good.

A fully fledged trade war with China has started, surely to be on steroids once Trump gets in. Combined with a massively overvalued stock market, buoyed by those very chips that tariffs are being applied to. A sharp retreat in share prices will further dent consumer spending and confidence.

The US housing market is also looking vulnerable and those property owners unable to move because of steep refinancing costs, will be able to create more liquidity as rates come down.

Let's not mention inflation.

Breaking

Russia warns Israel of 'dramatic consequences' over its strikes on Syria[PressTV]

In Focus

Japan

Japan Likely Spent $13.5 Billion on Yen Intervention on Friday [Bloomberg]

USD / YEN Daily

The Bank of Japan was intervening pretty much every day this week as the USD looked weaker against other currencies.

USD / YEN is down but still in a strong uptrend. Look for 180 within the next year.

Japan Trade Balance Jun 2024

US Economy

Poor sound quality but the message is clear. Interest rates are coming and soon !

Stealth liquidity has been a feature of the economy recently. On top of FED programs to help banks with distressed loans and impaired balance sheets, a number of new measures have helped liquidity in the economy.

• Treasury buybacks
• Bank leverage ratio changes
• The FED's balance sheet duration shuffling

US M2 [Federal Reserve Bank of St Louis]

Credit is actually quite tight though:

Charles Schwab Corp Share Price Daily

A sharp high-volume sell-off in one of the US biggest brokerages. Management scared investors by reporting less money market deposits and higher cost of borrowing.

US Retail Sales June 2024

Seasonal adjustments, as usual, pushed the retail sales number higher but the underlying numbers were more worrying.

US Initial Jobless Claims

Supporting Powell's new focus, jobless claimed inched higher.

More signs of economic distress are emerging at the margin.

Evictions Surge in Major Cities in the American Sunbelt [Wall Street Journal]

US FISCAL 

COVID changed everything. We hear that all the time. In regards to the US Government spending money, that's so true.

Chinese Investors Dump Record Amount of US Stocks and Bonds [Bloomberg]

China

 China GDP Q2 2024

Real estate still collapsing and weakening retail sales are the backdrop for a weak GDP print. Gold and silver prices in China have been significantly above London and Comex suggests savings are not going to help the Chinese economy.

Can Xi keep a lid on China’s mounting social strains? [FT]

Hong Kong Employees at China Financial Firms Face Pay Clawbacks [Bloomberg]

Rumours about Xi having a heart attack appear to have no substance although he hasn't been seen for a week.

In The Background

CRE / Banks / CLOs

The office meltdown continues, now affecting hotels, multifamily, banks and investors. For at least a year markets have been totally ignoring it. Jamie Dimon told us it wasn't a problem but it's getting worse not better.

Real-Estate Meltdown Strains Even the Safest Office Bonds [Wall St Journal]

Bitcoin / US Election

Trump / Vance pro Bitcoin stance in order to get adoption from younger voters has morphed into talk of using Bitcoin as a US strategic reserve. Certainly Trump's US "ownership" of BTC in order to save it from China is characteristic.

Interesting price action. Bitcoin is in a bull flag coiling for a strong move up. It's been remarkably resilient this week as tech stocks have been crushed.

Bitcoin Daily

Donald Trump picks Ohio senator JD Vance as his running mate for 2024 election at Republican National Convention [ABC]

Canada

Canada CPI June 2024

Bank of Canada's business outlook survey tells us inflation is no longer an issue but the economy is.

Overview

• Firms’ sales outlooks are mostly unchanged from last quarter and remain more pessimistic than average. Businesses tied to discretionary spending reported particularly weak sales expectations, while those tied to essential spending see population growth continuing to benefit their sales.
• Investment spending plans also remain below average. Weak demand, elevated interest rates, uncertainty about the business environment and the high cost of machinery and equipment were cited as discouraging investment. In this context, investment spending has become increasingly concentrated on upkeep and repair rather than expansion or improvements in productivity.
• The share of firms reporting labour shortages is near survey lows. Still, few firms plan to reduce headcounts. Businesses attribute easing labour market conditions to a weaker economy and to rapid population growth.
• Businesses expect the growth of their input prices and selling prices to slow, suggesting that inflation will continue to decline over the coming year. Most firms that made abnormally large price increases in the past 12 months do not plan to do so again in the coming year.
• Firms’ expectations for inflation fell in June and are now in the Bank of Canada’s inflation-control range.

The Business Outlook Survey released by the Bank of Canada [Bank of Canada]

Europe

ECB holds

Lagarde and Co. waiting for the FED. 

 EU Industrial Production May 2024

EU CPI June 2024

Inflation in the EU is more stubborn than in Canada and the UK. Industrial production is still plunging and a lack of innovation will make it really hard to grow out of what surely is a recession.

If red tape was an Olympic sport, the the EU would get the gold medal.

ECB Is Set to Delay Findings of Leveraged Loans Probe After Backlash from Banks [Bloomberg]

United Kingdom

Australia

Australia Unemployment Rate June 2024

Australia is paralysed by a labour Government that never comes to work and a central bank too scared to make a positive decision. Whilst the rest of the world is cutting rates, the RBA is still still worrying about rate hikes.

CFMEU corruption claims are bad news for a labour movement already in a battle for survival[ The Guardian]

Liverpool City Council under threat of suspension, election delayed over ‘widespread dysfunction’ [Sydney Morning Herald]

What's Next ?

Will the Bank of Canada cut. Surely inflation and business conditions warrant it. They'll be acutely worried about shortage of housing and house prices but only evicting migrants and destroying the money they created out of thin air, will solve that problem. We'll find out on Wednesday.

Durable goods and PCE in the US Thursday and Friday.

Look for Biden to pull out of the US election.

This Week's Important Economic Indicators [London time]