Ian Reynolds
Breaking: Rescue teams search for Iran's president after helicopter crash [BBC]
Breaking: Putin and Xi Vow to Step Up Fight to Counter US ‘Containment’ [Bloomberg]
Breaking: How Slovakia’s toxic politics left PM fighting for his life
As the geopolitical tension escalates from actual wars to the assassination attempt of the prime minister of Slovakia, the President of Iran disappearing in a helicopter crash and unprecedented military actions in the Taiwan Strait, just as the new Taiwanese President takes charge, so the accumulation of hard assets continues: Gold, Silver, Copper etc and a commodities supercycle seems to be upon us. And that has to be inflationary for those who haven't been accumulating.
In the last 2 years, central banks and, in particular, China and Russia have been continuously amassing Gold. Recently the Chinese authorities have urged the population to buy Gold, it's much easier to do in China, as has India who is naturally a big purchase for jewellery.
Friday saw Gold and spectacularly Silver and Copper surge.
In equity markets we also saw the re-emergence of Gamestop as the meme-stock craze reasserts. Despite what the FED says, liquidity is abundant for this to happen.
That's liquidity in markets. The consumer is now in bad shape in the US and even worse shape in Europe.
Gold Monthly since 1971
Gold bars sold out in Hanoi, HCMC as prices skyrocket [VN Express]
Silver Monthly since 1995
Regulators Sounding The Alarm
Powell at Foreign Bankers Association in Amsterdam this week, expressed his concern yet again at the fiscal financial deterioration in the US.
When asked about whether the expanding deficits and national debt makes his life trickier, Jerome Powell responded:
"I think it is utterly non-controversial to say that US fiscal policy is on an unsustainable path..."
"We're going to have to deal with this sooner or later and sooner is a lot more attractive than later....."
"I think you mentioned Congressional Budget Office. I think anyone, everyone, and anyone, should be reading the things they're publishing about the U.S. budget deficit and the path and should be very concerned that elected people need to get their arms around it sooner rather than later.
Fed Chair Jerome Powell speaks to the Foreign Bankers' Association in Amsterdam — 5/14/2024
US Economy
A slightly dovish CPI helped calm markets although there is no sign that inflation is going lower after 4 consecutive CPI prints at the same levels. Many are arguing higher, many lower but, in reality, we're stuck at these levels.
Yet markets are determined on rate cuts and now as an emergency action against the legions of black swans circling the global economy.
The chart of truth, US 10 year bond yield show us a 40 year secular deflationary trend ending in 2022.
US 10 Year Bond Yields Monthly
PPI came in hotter than expected, and therefore near future CPI unlikely to decline much.
US PPI APRIL 2024
You can read CPI any way you want
US CPI April 2024
But retail sales are collapsing
US Retail Sales April 2024
And consumer confidence id plummeting
University of Michigan Consumer Sentiment (May)
Federal Reserve Bank of Philadelphia May Business Survey 2024
Seattle Could Shutter 20 Elementary Schools Due To Budget Constraints [Zerohedge]
Goldman Strategists Say Loss-Making US Companies Face Rates Risk [Bloomberg]
How One of the World's Oldest Hedge Funds Went Bankrupt [Bloomberg]
In The Background
>> Japan
An amazingly quick deterioration in the Japanese economy, recently thought of as solid with dangerous inflationary trends.
JAPAN GDP Q1 2024
Japan's economy skids, clouding BOJ's rate hike plans [Reuters]
BOJ May Raise Rates as Soon as June, Ex-Chief Economist Says [bloomberg]
>>China
China is now throwing the kitchen sink at the economy including plans to buy unsold real estate from developers.
And it's working as far as the stock market is concerned.
Hang Seng Monthly
Chinese officials are considering government purchases of unsold homes (from distressed developers at steep discounts) to ease apartment glut
China considers local government purchases of unsold homes, Bloomberg News says [Reuters]
>> Europe
Stuck
EU GDP Q1 2024
Germany may introduce conscription for all 18-year-olds [The Telegraph]
Australia
Australia Wage Price Index Q1 2024
Inflation still elevated and unemployment jumping
Australia Unemployment April 2024
The budget looks inflationary and certainly doesn't seem to be trying to achieve anything apart from buying votes.
Sleepwalking
What's Next
Check out the FED minutes for any change to here for longer narrative.
This Week's Important Economic Indicators [London time]
