Month: July 2024

Authored by Ryan McMaken via The Mises Institute,

The Federal Reserve’s Federal Open Market Committee (FOMC) left the target policy interest rate (the federal funds rate) unchanged at 5.5 percent last week. The target rate has now been flat at 5.5 percent since July of 2023—as the Fed waits and hopes that everything will turn out fine. In his prepared remarks at Wednesday’s FOMC press conference, Powell continued with the soothing message he has generally employed at these press conferences over the past year. The general message has been one of moderate but sustained growth, and  an economy marked by “strong” employment trends and moderating inflation.

Powell then combined this view of the economy with a general narrative on Fed policy in which the FOMC will hold steady until the committee believes that inflation is returning to the “long-run target of two-percent inflation.” Once the Fed is “confident” that the target inflation level has been secured, then the Fed will begin cutting the target interest rate, and this will then send the economy back into another expansion phase.

Through it all, Powell and the FOMC insist that there will be no significant bumps in the road and a “soft landing” will be achieved. That is, Powell and the Fed repeatedly tell the public that the Fed will thread the needle of pulling down price inflation while also ensuring that the economy continues to grow at solid rates while employment remains strong.

But there are two problems with this narrative:

• The first is that the Fed has never actually managed to pull this off – at least not at any time in the last 45 years. In actual experience, this is what happens: the Fed denies there is a recession approaching well until after the recession has begun. Then, the Fed cuts interest rates after unemployment has already begun to march upward.

• The second problem with the narrative is that the Fed is not motivated simply by concerns over the state of employment and the economy. Yes, the Fed would have us believe that it cares only about an unbiased reading of economic data, and that Fed policy is guided by this alone. When the Fed claims to be “data driven” this is what it means. In reality, the Fed is deeply concerned with something else entirely: keeping interest rates low so that the federal government can continue to borrow enormous amounts of money at low yields. The more the federal government adds to its enormous debt, the more pressure there will be on the central bank to keep rates low and send them lower.

Yes, it’s true the Fed fears price inflation because price inflation causes political instability. When this fear wins out, the fed lets interest rates rise. But, the Federal Treasury also expects the Fed to keep interest rates low for the elites in the federal government who never tire of deficit spending. When the “need” for deficit spending wins out, the Fed forces interest rates down. These two goals are directly opposed to each other. Unfortunately, if the Fed has to choose between the two, it is likely to choose the path of lower interest rates and rising price inflation.

How “Soft Landings” Really Happen

Let’s first look at the “soft landing” myth. Talk about “soft landings” have been common in the mas media since at least the recession of 2001. As late as July of 2001, for example, Bloomberg authors were speculating about how soft the soft landing would be. It eventually turned out there was no soft landing and the Dot-Com bust soon followed.

“Soft landing” talk was even more prominent in the lead-up to the Great Recession. As late as mid-2008, months after the recession had already begun, fed Fed Chairman Ben Bernanke was predicting a soft landing and that there would be no recession at all. In that recession, the unemployment rate reached 9.9 percent.

We see this all at work again right now. A look at the Fed’s Summary of Economic Projections (SEP) shows that Fed officials are committed to claiming there will be no recession and economic growth will continue on a slow, steady, and positive trajectory. Yes, the SEP suggests the Fed will soon begin to lower interest rates, but in this fantasy version of the economy, that will be followed by continued economic growth and stable employment.

That’s not what happens in real life, though. Note, for example, that over the past 30-plus years, that Fed rate cuts did not cap off a “soft landing,” but actually preceded the most vigorous period of job losses. As can be seen in the graph, cuts to the federal funds rate come several months before sizable increases in the unemployment rate. Sharp rate cuts began in 1990, for example, and the 1991 recession soon followed. Similarly, the Fed began to cut rates in late 2000, and then the unemployment rate soon accelerated upward. This again happened in 2007 when unemployment began to mount shortly after Fed rate cuts.

I’m not saying that the cuts to the federal funds rate caused rising unemployment, of course. I’m saying that the Fed knew there was no soft landing in the works, and knew that recessions were on the way. That’s why the Fed hit the panic button when it did, and cut rates in hopes of shortening the coming recession.

This reality makes it clear that there is absolutely no reason to believe Fed claims that it has everything under control, and that rate cuts will come only after the Fed has tightened just enough to rein in inflation without popping the many bubbles that fueled employment and consumer spending in the lead up to the recession.

In summary, this is how it has really worked: fearful that inflation is getting out of control, the Fed will raise the target interest rate and generally “tighten” monetary policy. Through it all, the Fed will insist there is no recession on the horizon and that a “soft landing” is in the works. Eventually, however, it becomes clear that the economy is substantially weakening and the Fed has been either lying about the economy or has been simply wrong. At that point the Fed then then does what it always does (in recent decades) when it fears a recession: it loosens monetary policy in hopes of blowing up a whole new series of bubbles to create a new boom period.

This is far cry from the sedate, measured, and perfectly controlled story of monetary policy that the Fed would have us believe.

The Fed Exists to Keep the Federal Government Funded with Easy Money  

The second problem with Powell’s narrative is that the Fed is not motivated simply be concerns over the state of employment and the economy. While it would be nice to think the Fed is primarily concerned with the “everyman” and his job prospects, the reality is that the Fed is very much concerned with keeping borrowing costs low so that Mitch McConnell, Nancy Pelosi, et al, can keep buying votes and fueling the warfare-welfare state with enormous amounts of deficit spending.

Keeping borrowing costs low—by forcing down interest rates—is now more important than it has been in many decades. Over the past four years, the total federal debt has skyrocketed by 11 trillion dollars from $23 trillion to $34 trillion. In an environment of near-zero interest rates, this might be manageable. However, when this kind of debt is combined with rising interest rates, interest payments are rapidly rising and consuming ever larger portions of the federal budget. If the regime is not careful it could face a sovereign debt crisis.

When the Fed is able to force interest rates down without fear of runaway inflation, rising debt is not much of an urgent problem. As we can see in the graph, a rapidly rising federal debt did not lead to sizable growth in interest costs in the wake of the Great Depression. That, however, was during a period of very low interest rates. Since 2022, however, Interest costs on the debt have rocketed upward as the Fed has been forced to allow interest rates to rise.

In fact, interest costs have more than doubled since 2021. Yet, we’re not even seeing the full impact of mounting debt combined with rising interest rates. Interest costs over the past few years have been kept somewhat under control by the fact that federal debt does not mature all at once. In 2024, however, nearly 9 trillion dollars worth of federal debt will mature. That will need to be replaced with new debt which will need to be paid off at higher interest rates (i.e., at higher yields) than the maturing debt. Combined with the $2 trillion or so in new debt that will be added in 2024, the Federal government will need somebody to buy more than 10 trillion dollars worth of federal debt. That a whole lot of debt and the Fed will be expected to help the federal government somehow keep interest rates from rising further. This will require the Fed to enter the marketplace and buy up large amounts of debt in order to push down yields.

In other words, political realities will mean the Fed will have to embrace new rate cuts whether price inflation is at the two-percent goal or not. The Fed will say that price inflation has hit the “target” regardless of whether or not that is the reality. Since the Fed now defines its two-percent target in terms of averages and long-term trends, the Fed need only say that it has determined that the “trend” points toward falling price inflation.

Then, voilà, the Fed can get to doing what really matters to the federal government: laundering federal deficits by forcing down interest rates.

Last week, Jay Powell performed the usual song-and-dance that is the foundation of the central bank’s political legitimacy: claim it is skillfully managing the economy while claiming to be deeply concerned about the daily struggles of ordinary people who face the ravages of price inflation. The reality behind this routine is something very different.

Leslie’s shares crashed as much as 38% in the early US cash session after the swimming pool supplies retailer announced preliminary third-quarter results that missed the average analysts tracked by Bloomberg and slashed its full-year forecast on continuing consumer weakness. 

Here’s a snapshot of the preliminary third-quarter results (courtesy of Bloomberg):

• Prelim sales about $570 million, estimate $614.6 million (Bloomberg Consensus)

• Prelim adjusted EPS 32c to 33c, estimate 42c

• Prelim adjusted Ebitda $108 million to $109 million, estimate $131.2 million

“Considering these preliminary results and expectations for the fourth quarter of fiscal 2024, the Company is revising its full year fiscal 2024 outlook,” Leslie’s wrote in a statement. 

Here’s a breakdown of the revised full-year fiscal 2024 outlook:

• Sees sales $1.32 billion to $1.35 billion, saw $1.41 billion to $1.47 billion, estimate $1.42 billion (Bloomberg Consensus)

• Sees adjusted Ebitda $117 million to $131 million, saw $170 million to $190 million

• Sees adjusted EPS 3.0c to 9.0c, saw 25c to 33c, estimate 28c

Mike Egeck, CEO, explained that the “cold and wet spring weather” during the quarter “reduced the number of pool days in non-seasonal markets and delayed the start of pool season in seasonal markets.” 

This is key: 

“We also continued to see weakness in large ticket discretionary categories as persistent inflation and high interest rates pressure pool owners’ wallets,” Egeck said. 

Goldman analyst Kate McShane told clients this morning that after the company’s dismal preliminary results, their price target has been cut to $4, down from $5. 

“LESL management pre-announced its Q3 results AMC on 7/17 as a result of wetter weather and ongoing weakness in demand for big ticket items. We have lowered our FY24, FY25 and FY26 EPS estimates as a result. Our target price is now $4 (down from $5),” McShane said. 

She said, “We remain Neutral on LESL as the company works through a normalization of demand post COVID.” 

Here’s a breakdown of McShane’s report to clients:

Q3 preannouncement details – The Company expects preliminary sales for the fiscal third quarter of approximately $570 million (compared to FactSet consensus of $598mn). Gross profit is expected to be $228 to $229 million (compared to FactSet consensus of $245mn) and gross margin is expected to be approximately 40%. Net income is expected to be $56 to $58 million. Adjusted EBITDA is expected to be $108 to $109 million, adjusted net income is expected to be $59 to $60 million, and adjusted diluted earnings per share are expected to be $0.32 to $0.33 (compared to FactSet consensus of $0.39).

Full year guidance revised – The Company is also revising its full year fiscal 2024 outlook. Sales are now expected to be $1,321 to $1,347 million (down 7.4% at the mid point from original guidance), with gross profit now expected to be $483 to $499 million. Adjusted EBITDA is expected to be $117 to $131 million (down from original guidance of $170-$190m), and adjusted diluted earnings per share are expected to be $0.03 to $0.09 (down from original guidance of ($0.25-$0.33). The company expects to end the fiscal year with approximately 20% less inventory than at fiscal 2023 year-end and is expected to have more cash on hand at the end of the fiscal year compared to the end of fiscal 2023 (FY 23 cash was $55.4M).

Highlights of Q3; some data points showing signs of improvement – The guide for Q3 implies a SSS of ~-7%; a sequential improvement on both a one and two year stack basis (Q2 SSS was down 12.1%) driven by weaker equipment and larger ticket discretionary sales. However, sales trends improved throughout the quarter with June SSS ending -2%. Encouragingly, the company highlighted MSD growth in chemical sales in June (significantly improved from the down MSD growth in chemicals last quarter). Although trends improved in June, the company revised full year sales guidance at the mid point assumes Q3 trends continue through Q4, implying some conservatism, in our view.

She included upside and downside risks in her forecast:

• Upside risks include better-than-expected demand, particularly for discretionary products; stronger margins, driven by stronger sales and leverage; favorable weather, contributing to stronger seasonal demand; stable and/or better-than-expected chemicals pricing; and a more significant reduction in leverage.

• Downside risks include potentially sustained demand headwinds; if chemical price deflation is more than anticipated; promotional risk; lower-than-expected customer growth and retention; lower growth prospects if residential pools decrease in popularity; and execution risks.

Besides Goldman, here’s what other Wall Street analysts are saying about the preliminary third-quarter results:

Piper Sandler (neutral)

• Analysts Peter Keith and Alexia Morgan say Leslie’s seems to be “experiencing pressure from numerous angles,” noting that each of the company’s categories is trending toward y/y declines in 3Q and weak traffic in the residential channel
• PT cut to $3 from $6

Jefferies (hold)

• “Unfavorable weather continues to overshadow ongoing company efficiencies, as a cold and wet spring delayed the start to pool season ’24 and weighed on F’3Q results,” analyst Jonathan Matuszewski writes
• Notes weather improved in June along with the company’s performance; updated guidance assumes 3Q trends remain steady in 4Q
• PT cut to $3.50 from $4

The gloomy outlook for swimming pool supply demand caused the company’s shares to crash 38%. 

Shares stumbled to a record low in New York. 

This comes weeks after the world’s largest wholesale distributor of swimming pools and related outdoor living products, Pool Corp., warned about “dampening discretionary spending” that only signals a broader consumer downturn. 

Authored by Rystad Energy via OilPrice.com,

• The end of the Russia-Ukraine gas transit agreement in 2024 will disrupt gas supplies to several European countries, particularly Slovakia, Austria, and Moldova.

• To replace Russian gas, the EU will need to increase LNG imports and utilize alternative pipelines, such as the Trans-Balkan pipeline and the Balkan Stream.

• Central and Eastern European countries are collaborating on the Vertical Gas Corridor initiative to enhance energy security and diversify gas supplies.

The European Union (EU) targets a ban on Russian fuel imports by 2027. However, nearly half of Russia’s pipeline gas supplies to Europe and Moldova are still passing through Ukraine, totaling 13.7 billion cubic meters (Bcm) in 2023. As the EU discusses the possibility of involving Azerbaijan in a future transit deal, the current five-year gas transit agreement between Russia and Ukraine is set to expire by the end of 2024, leading to concerns about the future flow of these gas volumes. Rystad Energy predicts that Russia’s gas will need to be rerouted to Europe through alternative paths, requiring an additional 7.2 Bcm per year of liquefied natural gas (LNG) to replace the gas transiting Ukraine. Supply disruptions may occur sooner than initially expected, as indicated by the Austrian company OMV’s market warning in May.

Slovakia, Austria and Moldova are the European nations most dependent on transit volumes, importing about 3.2 Bcm, 5.7 Bcmand 2.0 Bcm, respectively, in 2023. Last year, Russian gas passing through Ukraine supplied EU countries via entry points in Slovakia and Moldova. Moldova is adjusting its supply while having agreed with Ukraine on a continuous flow of Russian gas until the end of 2025, largely supplied to the pro-Russia separatist region of Transnistria. In 2023, the country imported 74% of its gas through Ukraine and, for the first time, received gas from Romania and the south through reverse flows via the Trans-Balkan pipeline. Italy’s energy company Eni and Hungary also imported Russian gas through Ukraine, while Slovenia and Croatia have been smaller takers of Russian gas via Ukraine.

Halting Russian gas pipeline flows via Ukraine would significantly impact countries relying on these volumes. For example, when the transit extension expires after 2025, Moldova would need to reroute its 2 Bcm supplied via Ukraine, possibly through reverse flows of the Trans-Balkan pipeline. To reach Moldova, Russian gas could use the Isaccea entry point between Romania and Ukraine, but a transit agreement for the short 25-kilometer distance through Ukraine would be required. The Trans-Balkan pipeline has been operated in reverse flow since the end of 2022, with 0.54 Bcm of gas entering Moldova via Ukraine from Romania through the Isaccea entry point in 2023. Additionally, gas from the Southern Gas Corridor in Azerbaijan, as well as from Turkish and Greek LNG import terminals, can reach Moldova via the south. When the Russia-Ukraine transit agreement ceases, the only alternative supply routes for Central and East European countries would be the Balkan Stream and the Horgos entry point between Serbia and Hungary.

Russian producer Gazprom and European importers are keen on continuous supplies via Ukraine, while Ukrainian officials deny any intention for a renewed agreement with Russia. Without Azerbaijan or another third party transiting the gas following a swap deal with Russia, the EU will require about 7.2 Bcm of gas to be sourced from the LNG market. Terminals in Poland, Germany, Lithuania and Italy could forward these volumes to the most affected counties, such as Slovakia and Austria,

Christoph Halser, Gas & LNG Analyst, Rystad Energy

Rystad Energy forecasts potential changes to the 2023 gas balance for affected countries under the assumption of 50% and 0% flow of gas via Ukraine and capacity limitations at relevant entry point alternatives. Without Russian gas, Slovakia would find itself at the end of the flow chain, requiring about 4 Bcm of gas delivered through the Lanzhot entry point from Czechia. With additional regasification capacity in Poland only available in 2025, a zero-flow scenario may even entail reverse flows from Austria into Slovakia.

Austria, the largest offtaker of Russian gas in 2023, would pivot towards increasing imports from Germany via the Oberkappel entry point, expected to operate at a maximum annual capacity of 8 Bcm. However, for Rystad Energy’s baseline year of 2023, the import capacity at Oberkappel will not be sufficient to close the 8.53 Bcm import gap. Without short-term capacity adjustments, gas transits to Hungary would decline, and outflows to Italy would be stopped. If all Russian gas flows via Ukraine were to cease, Austria would need to import up to 2.5 Bcm from Italy via the Arnoldstein-Tarvisio crossing point.

Italy has several options to replace Russian gas pipelines and has largely achieved independence from the Ukrainian transit. However, the country would be required to source about 3.75 Bcm for Slovakia and Austria. These additional supplies could come from the Ravenna floating storage and regasification unit (FSRU) —5 Bcm per year from 2025—and 1.23 Bcm from pipeline supplies through Tunisia.

Hungary would face large challenges in case of a complete halt of Russian gas flow through Ukraine. Assuming Moldova is supplied via the south, capacity via the Trans-Balkan pipeline from Romania would be fully allocated, halting inflows from Romania. Furthermore, Austria would be unable to forward gas to Hungary, while Croatia won’t have additional regasification capacity available before 2025. Hungary would have to rely solely on increased gas flow through the TurkStream pipeline, whereby the Horgos entry point would be required to operate continuously at its maximum capacity of 9 Bcm per year. Alternatively, if Austria could source sufficient LNG from Italy, Hungary could receive additional gas through reverse flows at the Mosonmagyarovar entry point from Austria.

Central and Eastern European countries are preparing for a possible halt in the Ukraine gas transit and have joined forces to create a Vertical Gas Corridor under the EU’s Central and South Eastern Europe Energy Connectivity Initiative (CESEC). This year, on 19 January, a memorandum of understanding (MoU) was signed in Athens involving EU energy commissioner Kadri Simson and the Transmission System Operators (TSOs) from Greece, Bulgaria, Romania, Hungary, Slovakia, Ukraine and Moldova. The corridor would utilize existing infrastructure in Ukraine and Moldova and enable LNG imports from Greece and Turkey to reach Slovakia, Hungary and possibly Poland.

Furthermore, Turkey’s transmission system operator BOTAS and Bulgaria’s operator Bulgartransgaz signed an agreement in January 2024 to increase gas entry capacity at the Strandzha 1 entry point, enabling increased gas flows from Azerbaijan and the Caspian Sea region into Europe. This expansion could aid in raising Azerbaijan’s EU gas exports from 13 Bcm to 20 Bcm per year by 2027 and, in the long run, potentially transport Iranian gas through the Solidarity Ring Initiative.

Learn more with Rystad Energy’s Gas & LNG Solution.

By Michael Every of Rabobank

Markets are moving on trade news, tech stocks hit by the White House considering draconian moves against the Netherlands’ ASML and Japan’s Tokyo Electron for continuing to sell semiconductor equipment to China. The US can, if it chooses, prevent any entity selling items involving US tech. One wonders if the White House also saw the headlines about Google and Microsoft allegedly helping China circumvent exports controls on Nvidia chips(?)

Things will get far bumpier for markets, however. As I type, the Republican National Convention (RNC) is listening to “isolationist”, “protectionist”, “national conservative” vice-presidential candidate Vance, following former Trump national security advisor O’Brien saying he’s happy with the idea of 100% tariffs on Chinese imports. Two key points from Vance: “I will never forget where I came from,“ and, “We are done catering to Wall Street. We’ll commit to the working man. We’re done importing foreign labor.” Or importing in general, it seems.

As someone said of the RNC big screen video of Trump dancing to ‘YMCA’, “This is no longer your father’s Republican Party.” Some say it’s closer to your grandfather’s Republican Party, but your great-grandfather’s is more correct given Trump’s fixation on former President McKinley. Note the latter introduced US tariffs as a congressman in 1890, leading to a Democratic landslide which kicked him out of office, before winning the presidency in 1896 by again promising high tariffs,… then being assassinated in 1901. However, as I showed in 2017’s ‘The Great Game of Global Trade’, the following set of quotes show free trade is the US policy aberration

• “I use no porter or cheese in my family, but such as is made in America.” Washington (1789-1797)

• “Keep pace with me in purchasing nothing foreign where an equivalent of domestic fabric can be obtained, without regard to difference of price.” Jefferson (1801-1809)

• “The conditions necessary for Free Trade’s success –reciprocity and international peace– have never occurred and cannot be expected.” Munroe (1817-1825)

• “It is time we should become a little more Americanized, and, instead of feeding the paupers and labourers of Europe, feed our own.” Jackson (1829-1837)

• “Give us a protective tariff and we will have the greatest nation on earth.” Lincoln (1865)

• “Within 200 years, when America has gotten out of protection all that it can offer, it too will adopt Free Trade.” Grant (1869-1877)

• “Free trade cheapens the product by cheapening the producer. Protection cheapens the product by elevating the producer.“ McKinley (1897-1901)

• “Thank God, I am not a Free Trader.” Roosevelt (1909-1913)

• “We need protection as a national policy, to be applied wherever it is needed.” Coolidge (1923-29)

Yet while protectionism is now a topic of market conversation, and will be more so after Vance finishes speaking, most aren’t grasping what large-scale, US-centric protectionism actually implies.

One reason for that is that they have little to do with the physical economy, just digits and lines on screens. The last time this disconnect between physical reality and market views was laid bare was 2021-22, when the latter thought inflation and rates couldn’t go up, and those looking at logistics were saying we were “In Deep Ship”. Which we were.

It seems quite likely that we are going to get a repeat of that disconnect again today, as markets and central banks focus on imminent rate cuts, and ignore what we warned in January – “Same Deep Ship, Different Day”.

Look at footage of an oil tanker being explosively damaged by the Houthis this week, as they look to teach groups in Africa how to do the same, and wonder if this can’t yet get far worse. Elsewhere, Russia just put out an alert for Ukrainian sea drones round the crucial oil and commodity port of Novorossiysk: were these to disrupt cargo flows, it could have a major market impact.

Look at China-Europe freight rates soaring from $1,291 to $8,048 over the past year, now nearly 60% of the incredible Covid-era peak. Deliveries are taking up to three months, when they were formerly a month. How can any rational firm not try to stock up, exacerbating the problem?

Then think that are we going to get rate cuts soon, which must surely boost consumer demand (though strong Aussie jobs data today back our house call for more policy tightening there, and we have separately pushed back our call for the first RBNZ cut from August to October).

Moreover, any logical firm is going to buy as much from China now as it can to avoid any looming US tariffs.

In short, a worse supply-side logjam seems likely even before we get any US tariffs, and despite the evident goods deflation that we have been seeing for much of the past few months.

But don’t listen to me: listen to logistics experts. @FreightAlley notes, “Trumponomics promises to reshape the global economy in a way that hasn’t happened since the opening of China. The front lines will be across global supply chains. FreightWaves is hiring a full-time writer exclusively focused on the topic.” Watch that space.

Another reason why markets don’t fully grasp what is at stake here is that most in them, understandably, don’t understand how the global system works, just their small area. I’ve repeated many times how US tariffs don’t just mean higher inflation, but wholesale changes to the foundations of the entire global economic and market system: everyone and everything, except many in the US, will be thrown into dark, stormy waters if we return to a neo-mercantilist 19th century world on the High Seas – and we are setting sail in that direction, like it or not.

Asian exporters, for one, where China is wrapping of the CCP’s Third Plenum: we shall see what solutions they can come up with that don’t translate into even more exports, and so even fiercer global protectionist backlashes.

Europe, for another. Relatedly, the EU in will be on tenterhooks today waiting to see if von der Leyen is re-elected as President of the European Commission, despite a scandal swirling round her, and releases the detailed plans drawn up by Mario Draghi for boosting production and logistics to ensure ‘EU strategic autonomy.’ [ZH: she was].

However, France still has no government capable of building strategic autonomy, so is unable; and Germany has a government that is unwilling.

Case in point: Berlin is going to slash its aid budget to Ukraine from €8bn to €4bn to balance its books. True, Germany is limited by its constitutional debt brake, which restricts the federal deficit to 0.35% of GDP, except in times of emergency – but it’s Finance Minister Lindner who won’t declare the “existential” war in Ukraine to be one.

This was just before would-be VP Vance –a vocal sceptic of the US stepping in to bridge Europe’s inability/unwillingness to support Ukraine– took to the stage. Somehow, despite a notable lack of ammunition, Berlin never fails to find a way to shoot itself, and so Europe, in the foot.

Note that another Trump presidency would not be impressed by miserly, pacifist, mercantilist Germans in a world of profligate, militarist, mercantilists that can literally blow German goods out of the water – and foreign markets. One wonders how much more than €4bn Berlin’s decision might end up costing them.

Authored by Mike Shedlock via MishTalk.com,

Let’s tune into the Fed’s Beige Book summary of economic activity in the twelve Federal reserve districts.

Summary below from The Beige Book Summary of Commentary on Current Economic Conditions.

Beige Book Overall Activity Key Points

• Seven Districts reported some level of increase in activity, five noted flat or declining activity—three more than in the prior reporting period.

• Wages continued to grow at a modest to moderate pace in most Districts, while prices were generally reported to have risen modestly.

• Household spending was little changed this period according to most District banks. Auto sales varied across Districts this cycle, but some Districts noted that sales were lower due in part to a cyberattack on dealerships and high interest rates.

• Most Districts saw soft demand for consumer and business loans. Reports on residential and commercial real estate markets varied, but most banks reported only slight changes, if any, in recent weeks. Travel and tourism grew steadily and was on par with seasonal expectations.

• Districts also reported widely disparate trends in manufacturing activity ranging from brisk downturn to moderate growth.

Boston: Economic activity rose modestly on balance. Prices increased slightly, and wage growth was slow amid stable employment levels. Residential real estate activity increased with improvements in supply, but commercial activity remained flat with increasing concerns for office leasing activity. The outlook remains cautiously optimistic, but contacts continue reporting elevated uncertainty.

New York: On balance, regional economic activity was little changed. Labor market conditions continued to moderate, with labor demand easing and the supply of workers increasing noticeably. Consumer spending was up slightly and remained solid. Though inventory increased, home sales activity remained restrained. Selling prices continued to increase at a modest pace.

Philadelphia: Business activity continued to grow slightly in the current Beige Book period. Nonmanufacturing activity lifted job growth to a modest pace; however, wage inflation remained modest. Firms reported modest increases in costs paid and prices received and noted increased competition in consumer-facing sectors. Expectations for future growth remained slightly positive overall—waxing for most firms, but waning for manufacturers.

Cleveland: District business activity declined slightly in recent weeks, and contacts expected flat activity in the months ahead. Consumer spending continued to decline modestly, and demand for manufactured goods softened. Employment levels remained flat. Overall, contacts indicated that wage and input cost growth remained moderate, and that selling prices grew modestly.

Richmond: The regional economy grew slightly this period, down from a modest pace of growth reported last cycle. Consumer spending on goods and food services was generally flat to up only slightly; however, spending on leisure travel increased moderately, particularly in coastal areas of our region. Employment grew slightly and wage growth continued to exceed price growth, putting downward pressure on margins for some businesses. Price growth remained moderate.

Atlanta: Economic activity was relatively flat. Labor markets stabilized; wage growth eased. Nonlabor inputs cost growth slowed, on net. Consumer demand remained flat. Business and group travel improved. Home sales were flat or slightly down. Transportation activity was mixed. Loan demand was flat. Energy activity was mixed. Agricultural conditions improved.

Chicago: Economic activity increased slightly. Employment was up modestly; business and consumer spending rose slightly; nonbusiness contacts saw little change in activity; and manufacturing and construction and real estate activity edged down. Prices were up modestly, wages rose moderately, and financial conditions loosened a bit. Prospects for 2024 farm income decreased slightly.

St. Louis: Economic activity across the Eighth District has continued to slightly increase since our previous report. Inflation pressures increased modestly, with slower price growth than in previous reports. Reports on consumer spending were mixed. District crop conditions remain stable with high rainfall mitigating excessive heat.

Minneapolis: District economic activity fell slightly. Employment grew but labor demand softened. Wage pressures remained moderate, and prices ticked up modestly. Consumer spending was flat but some segments remained healthy. Manufacturing fell and the outlook was negative. Commercial and residential construction improved slightly, and home sales were mixed. Agricultural conditions fell as farm income weakened.

Kansas City: The Tenth District economy expanded at a moderate pace. Hiring activity slowed as many businesses pulled back on new job postings, but employment levels were stable. Ongoing strength in labor markets supported modest growth in wages. Consumer spending grew at robust pace, driven by discretionary spending with particularly strong growth in travel-related consumption. Prices grew at a modest pace as pass-through of costs remained difficult.

Dallas: Economic activity rose slightly over the reporting period, buoyed by growth in nonfinancial services, finance, and energy sector activity. Housing demand and retail sales weakened in part due to elevated pricing and borrowing costs, while manufacturing output held steady. Employment increased, and wage growth was moderate, though pressures eased. Outlooks were less pessimistic overall.

San Francisco: Economic activity and employment levels were stable. Wages and prices grew slightly, while retail sales fell slightly. Activity was mixed in services, manufacturing, and commercial real estate sectors, but continued to slow in residential real estate. Conditions in agriculture weakened a bit. Financial sector conditions were little changed.

The Progression

• Modest to Slight or Flat (2)

• Slight to Flat or Decline (5)

• Flat to Decline (3)

• Already Declining (2)

This looks very recessionary because it is very recessionary. I think within 2-3 months a majority will be in decline.

Recession When?

I thought recession started in May or June and I have seen little to change my minds but perhaps I am a couple months early.

For discussion, please see Weak Data Says a Recession Has Already Started, Let’s Now Discuss When

Authored by Paul Joseph Watson via Modernity.news,

MSNBC’s Joy Reid ludicrously compared Joe Biden getting COVID to Trump surviving an assassination attempt, asking, “Isn’t that exactly the same?”

Yes, really.

The White House announced that Biden, who has supposedly taken every COVID booster shot available, had once again contracted the virus and was suffering with “mild symptoms”.

That prompted Reid to go on a bizarre rant in which she first expressed her hostility to Trump’s brave fist pump after he was almost killed.

JUST IN: A clearly flustered Joy Reid says Trump getting shot in the head is “exactly the same” thing as Biden getting cov*d.

Holy sh*t this woman is nuts.

Reid started by sharing her frustrations that Trump was able to raise his fist in the air after getting shot.

“Donald… pic.twitter.com/omR4mtiKxL

— Collin Rugg (@CollinRugg) July 18, 2024

“Donald Trump is an elderly man who for whatever reason, was given nine seconds to take an iconic photo op during an active shooter situation. Weird situation. We’ll figure that out one day,” she said.

“But his survival of that and, and bouncing right back and going right to his convention is being conveyed in the media world as a sign of strength,” added Reid.

“This current president of the United States is 81 years old and has COVID should he be fine in a couple of days?”

“Doesn’t that convey exactly the same thing? That he’s strong enough, older than Trump, to have gotten something that used to be really fatal to people his age?”

“So if he comes back and is fine and is able to do rallies isn’t that exactly the same?” asked Reid.

Yes, Joy, nearly getting your head blown off by a matter of inches is totally the same as catching a cold.

Former White House propaganda czar Jen Psaki agreed with Reid that “it should” be treated the same.

Reid has had some notoriously bad hot takes of late, but this one really takes the biscuit.

She previously asserted that Donald Trump shouldn’t have even been allowed to stand next to Biden at the debate.

Before that, she celebrated her contention that the show trials against Trump were a form of racial revenge, while also finding time to have a hissy fit over ‘white boy summer’.

*  *  *

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Futures are higher, rebounding from Wednesday’s tech-fueled rout. At 7:40am, S&P futures are up 0.1% and off session highs, while Nasdaq futures rise 0.4% after concerns over tight US restrictions on chip sales to China drove its worst day since 2022; Semi stocks see some relief after Taiwan chip giant TSMC’s earnings beat expectations: NVDA +2.7%, AMD +2.1%, AVGO +1.3%. Mag7 names are higher, too, with VRT +1.7% pointing to potential gains in second derivative AI plays. Major The Stoxx 600 index added 0.3% as most European markets trade higher ahead of the ECB at 8.15am ET, where the expectation is for rates to be held steady ahead of a potential Sept cut. China-exposed stocks are leading alongside macro recovery while AI/Semis remain under pressure despite positive TSMC earnings. Bond yields are higher 2-3bps with the belly underperforming; European bond yields are higher as many curves bear flatten. After tumbling to a 2-month low thanks to a surge in the yen driven by a reversal in the carry trade, the dollar was slightly higher as President Joe Biden faced intensified calls to bow out of the 2024 race. Commodity weakness continues with pockets of strength in precious metals and natgas (WTI is flat). Today’s macro data is focused on jobless claims and 3x Fed speakers.

In pre-market trading, US tech stocks were set to gain after Wednesday’s sharp selloff in the sector as a positive earnings update from Taiwan Semiconductor – the chipmaker for Apple and Nvidia – somewhat restored sentiment. Airline stocks lost ground after the earnings outlook for United Airlines fell short of estimates. Here are the other notable premarket movers:

• Beyond Meat shares drop 12% after a Wall Street Journal report that the firm has engaged with a group of bondholders to start talks about a balance-sheet restructuring.
• Chuy’s Holdings surges 47% after Darden Restaurants agreed to purchase the Tex-Mex restaurant chain for $37.50 a share.
• Leslie’s shares slumped 23% after the swimming pool supplies retailer slashed its full-year forecast and announced preliminary third-quarter results that missed estimates. Stifel cut the company to sell from hold and lowered its price target on the stock to a Street low, noting the enhanced risk around the company’s elevated leverage profile.
• Lilium shares rose 8.1% after Saudia Group signed a binding agreement for 50 jets with options for the purchase of 50 more from the eVTOL company.
• United Airlines (UAL US) shares rise 0.1%, erasing a drop of as much as 1.4%. The carrier’s adjusted earnings per share forecast for the third quarter missed consensus estimates. TD Cowen says the guidance was a “curve ball” but expects management to capture market share.
• VF Corp shares rise 1.5% after the apparel and footwear company was upgraded to buy from neutral at Citi, which said the sale of the Supreme brand has removed an overhang from the stock.
• Major markets are higher as markets prepare for the ECB at 8.15am ET, where the expectation is for rates to be held steady ahead of a potential Sept cut. Regional bond yields are higher as many curves bear flatten. China-exposed stocks are leading alongside macro recovery while AI/Semis remain under pressure despite positive TSM earnings. Value is leading, Cyclicals are lagging. UKX +0.9%, SX5E +0.2%, SXXP +0.4%, DAX +0.2%.

One day after the worst rout for the Nasdaq since 2022, analysts said a relatively robust earnings season and expectations of interest-rate cuts from the Fed and other central banks are also supporting sentiment. Later in the day, streaming services giant Netflix will be the first major US tech company to report results — it’s expected to show continued growth in global subscriber numbers. Meanwhile, concerns around tech haven’t fully dissipated, and Amsterdam-listed chip giant ASML –  among companies that could be hit by any tougher US measures – extended Wednesday’s 11% rout. That, alongside the prospect of trade tariffs under a potential Donald Trump presidency, continue to weigh on Europe’s Stoxx 600 index.

“I’m not surprised people are trying to buy the dip,” said Michael Brown, senior strategist at Pepperstone Group Ltd. “The fundamental bull case remains strong for equities — earnings and economic growth look resilient and the Fed should start cutting rates from September.”

Later in the day, a string of Fed rate-setters are due to speak, including San Francisco Fed chief Mary Daly and Governor Michelle Bowman. Initial jobless claims figures due later Thursday will give investors the latest snapshot of the state of the economy.

European stocks rose with the Stoxx 600 up 0.3% led by the tech sector as TSMC lifted its revenue outlook for 2024. Major markets were higher as markets prepare for the ECB at 8.15am ET, where the expectation is for rates to be held steady ahead of a potential Sept cut. Regional bond yields are higher as many curves bear flatten. China-exposed stocks are leading alongside macro recovery while AI/Semis remain under pressure despite positive TSM earnings. Value is leading, Cyclicals are lagging. UKX +0.9%, SX5E +0.2%, SXXP +0.4%, DAX +0.2%. On the earnings front, Volvo AB rose after it reported better-than-expected profits for the second quarter, though the update from telecom firm Nokia Oyj disappointed, knocking the stock as much as 10% lower. Here are the most notable European movers:

• Volvo Car gains as much as 8.9% in early trading after the Swedish automaker reported operating income for the second quarter that beat the average analyst estimate, outweighing the company’s reduction in its growth outlook for the year.
• MIPS rises as much as 30% after reporting second-quarter figures that beat the average estimates.
• Hemnet surges as much as 18%, the most since January to take it to a record high, after the Swedish real estate listings platform reported very strong second-quarter earnings, boosted by strong uptake of the company’s premium listings offerings.
• Schroders shares rise as much as 6.2%, the most since November 2022, after Morgan Stanley upgraded the UK asset manager to overweight from equalweight, citing analysis of fund flows.
• Publicis shares jump as much as 8.5% after the advertising agency boosted FY organic sales growth guidance, as the company flagged market-share gains and double-digit growth in China. Peer WPP also rises.
• Getinge shares jump as much as 13%, the most since March 2020, after the Swedish medical technology firm reported 2Q results that were better than market expectations.
• Sulzer rises as much as 5.3% to a new high after upgrading full-year guidance on orders and sales.
• ABB shares fall as much as 7.1% after the Swiss industrial giant reported orders below estimates as weaker demand for its automation products offset gains in its power-grid business.
• European semiconductor stocks are trading lower on Thursday, extending this week’s rout in the technology sector as a positive update from TSMC failed to lift sentiment, with markets still worrying over rising geopolitical risks that threaten the industry.
• Novartis shares drop as much as 3.1% after the drugmaker raised its profit forecast for the second time this year — a move that had been expected by some analysts.
• Husqvarna falls as much as 14%, the most in over four years, as the Swedish outdoor maintenance products firm reported second-quarter earnings that missed estimates, with DNB markets seeing consensus downgrades ahead.
• Telenor drops as much as 3.4%, the most in more than two months, after the Norwegian telecom operator delivers its second-quarter results.
• EQT slides as much as 8.2% after the Swedish private equity group’s second-quarter earnings missed Ebitda expectations, reflecting smaller-than-expected fee income as the company remains in a holding pattern waiting for exit activity to pick up.

Earlier, Asia stocks slumped echoing the tech rout stateside. Nikkei 225 underperformed amid recent currency strength and as large tech stocks suffered similar fates to their US counterparts amid the threat of tighter restrictions to supply China, while Japanese trade data showed exports and imports missed estimates. Hang Seng and Shanghai Comp. were mixed and ultimately rangebound with sentiment sapped by ongoing protectionist concerns. Australia’s ASX 200 was pressured by weakness in tech and telecoms but with downside cushioned after mixed jobs data which showed higher-than-expected employment change.

In FX, the dollar index traded near the lowest level in two months, while the yen was slightly weaker at around 156.32 per dollar, while the pound wasn’t able to stay above $1.30. The euro weakened slightly ahead of a European Central Bank meeting that’s expected to signal the next rate cut will come in September.

In rates, treasuries are cheaper by 2bp-3bp, following similar move in bunds ahead of European Central Bank policy decision at 8:15am New York time. While no change is expected, President Lagarde in subsequent press conference may signal another rate cut is likely in September. US session includes weekly jobless claims, 10-year TIPS auction and several Fed speakers. Treasury 10-year yields around 4.185% are cheaper by 2.5bp on the day, broadly in line with bunds; curve spreads are within a basis point of Wednesday’s close.  French bonds hold losses while auctions saw decent demand.

In commodities, WTI pares gains to around $82.90. Spot gold rises roughly $7 to near $2,466/oz. Most base metals fall.

US economic data slate includes initial jobless claims, July Philadelphia Fed business outlook (8:30am), June leading index (10am) and May TIC flows (4pm). Fed members scheduled to speak include Goolsbee (10am), Logan (1:45pm), Daly (6:05pm) and Bowman (7:45pm)

Market Snapshot

• S&P 500 futures up 0.3% to 5,654.25
• STOXX Europe 600 up 0.3% to 516.13
• MXAP down 0.9% to 185.95
• MXAPJ down 0.4% to 578.73
• Nikkei down 2.4% to 40,126.35
• Topix down 1.6% to 2,868.63
• Hang Seng Index up 0.2% to 17,778.41
• Shanghai Composite up 0.5% to 2,977.13
• Sensex up 0.8% to 81,380.43
• Australia S&P/ASX 200 down 0.3% to 8,036.52
• Kospi down 0.7% to 2,824.35
• German 10Y yield little changed at 2.44%
• Euro little changed at $1.0935
• Brent Futures up 0.2% to $85.29/bbl
• Gold spot up 0.4% to $2,469.51
• US Dollar Index little changed at 103.79

Top Overnight News

• US President Biden tested positive for COVID-19 and is experiencing mild symptoms, while he received his first dose of Paxlovid: White House.
• US Senate Majority Leader Schumer told President Biden in a meeting on Saturday it would be better for the country if he ended his re-election bid: ABC News.
• Former House Speaker Pelosi privately told President Biden in a recent conversation that polling showed Biden cannot beat Trump and that he could destroy Democrats’ chances of winning the House: CNN.
• CNN quoted a senior adviser stating that US President Biden is now more receptive to calls for him to withdraw, while he reportedly asked advisers if they think VP Harris can win the election: CNN
• TSMC raised its projections for full-year revenue growth after results beat estimates, as it continued to ride the global wave of spending on AI. Shares rose premarket. BBG
• China’s Communist Party vowed to deepen supply-side reform and implement measures to resolve debt risks in property and local government. It also plans to attract foreign investment. More details are expected in coming days. BBG
• The ECB looks set to keep rates on hold today, but investors will be watching Christine Lagarde for hints at an expected reduction in September. Most analysts predict two more 25-bp rate cuts this year. BBG
• Germany plans to halve its military aid to Ukraine next year, despite concerns that U.S. support for Kyiv could potentially diminish if Republican candidate Donald Trump returns to the White House. German aid to Ukraine will be cut to 4 billion euros ($4.35 billion) in 2025 from around 8 billion euros in 2024, according to a draft of the 2025 budget seen by Reuters. RTRS
• JD Vance railed against Wall Street and corporate America on Wednesday night, putting economic populism at the center of the Republican party’s campaign to return Donald Trump to the White House. FT
• Biden has become “more receptive” in recent days to arguments about why he should exit the race as momentum for a change builds within the party (Schumer and Jefferies apparently both told Biden privately he should consider departing the race, and they intervened to prevent an accelerated nomination process to buy more time for a potential adjustment). NYT
• Biden in an interview said he would consider dropping out if a “medical condition” emerged, a comment that came before news of a positive COVID test (which forced the president to cancel some campaign events). WaPo
• United Air reported upside on Q2 EPS (4.14 vs. the Street 3.93), but RASM was soft (down 2.4%) and the Q3 guidance falls short of expectations (they see EPS of 2.75-3.25 vs. the Street 3.38). UAL mgmt. spoke positively on the industry capacity outlook in its Q2 earnings release (“sees mid-August as inflection point when industry-wide oversupply eases and United is best positioned to benefit”). RTRS
• Leslie’s issued a downside preannouncement for FQ3/June, w/EPS forecast to come in at 32-33c (vs. the Street 42c). In light of the June Q miss, mgmt. is cutting its guidance for the year (F24 EPS is seen at just 3-9c vs. the Street 28c).  RTRS

A more detailed look at global markets courtesy of Newsquawk

APAC stocks followed suit to the tech rout stateside owing to recent concerns of China tech curbs and tariff fears. ASX 200 was pressured by weakness in tech and telecoms but with downside cushioned after mixed jobs data which showed higher-than-expected employment change. Nikkei 225 underperformed amid recent currency strength and as large tech stocks suffered similar fates to their US counterparts amid the threat of tighter restrictions to supply China, while Japanese trade data showed exports and imports missed estimates. Hang Seng and Shanghai Comp. were mixed and ultimately rangebound with sentiment sapped by ongoing protectionist concerns.

Top Asian News

• Chinese President Xi will unveil his long-term vision for China’s economy with the CPC set to publish a document on Thursday offering the first glimpse of what some 400 officials discussed during the Third Plenum, according to Bloomberg. It was later reported that China’s Communist Party Central Committee will hold a news conference on Friday to brief the media on the Third Plenum.
• BoJ’s Osaka Manager says they wish to maintain an accommodative monetary environment as much as is possible, via JiJi; believe the next monetary policy meeting is extremely important.
• Japanese Cabinet Secretary Hayashi says no comment on FX moves; specifics of monetary policy is up to BoJ, BoJ policy not aimed at guiding forex; closely monitoring forex market. Expects BoJ to conduct appropriate policy to sustainably, stably hit price target, working closely with the government.
• China Third Plenum Communique: Adopts resolution on further deepening reform comprehensively

European bourses, Stoxx 600 (-0.1%) opened on a firmer footing, but at the cash open, contracts quickly dipped off best levels; weakness which was led by a renewed sell-off in the Tech sector. European sectors hold a slight positive bias; Autos take the top spot, lifted by post-earning strength in Volvo Car AB (+7.2%). Energy is also towards the top of the pile, given the upside in the crude complex; potentially also weighing on the Travel & Leisure sector, which underperforms. US Equity Futures (ES +0.3%, NQ +0.6%, RTY -0.2%) are mixed, with clear outperformance in the tech-heavy NQ, catching a bid following strong TSMC earnings; industry peers such as Nvidia (+2.5%), Micron (+1.7%) and AMD (+2%) all gain.

Top European News

• Sulzer Gains After Upgrading Full-Year Sales and Orders Guidance
• New UK Labor Force Survey Delayed to 2025 Amid Fresh Data Issues
• Schroders Rises as Morgan Stanley Upgrades on Flows; Cuts DWS
• ION Set to Close $1.5 Billion Deal for Italy’s Prelios This Week
• European Airlines, Hotels Fall as United’s Outlook Misses
• EU’s Von der Leyen Courts Greens in Bid for Second Term

FX

• DXY is a touch firmer with an initial attempt at recouping recently lost ground eventually running out of steam. 103.85 is the peak for today but is a far cry from yesterday’s 104.29 best.
• EUR is steady vs. peers in the run up to today’s ECB release which is largely expected to be a non-event. EUR/USD is currently lingering just below yesterday’s multi-month peak at 1.0948.
• GBP was relatively unreactive to what was a relatively in-line UK jobs report which saw the unemployment hold steady and wage growth recede, albeit remain at elevated levels. Nonetheless, Cable has returned to a 1.29 handle after topping out yesterday at 1.3045.
• JPY is slightly steadier trade for the pair after yesterday’s sharp sell-off. As it stands, the pair has bounced around a point of its overnight base at 155.38, and currently holds around 156.40.
• AUD the marginal best performer across G10 FX following better-than-expected Australian jobs growth, albeit this was accompanied by an unexpected uptick in the unemployment rate.

Fixed Income

• USTs are slightly lower, holding under 111-10 and as such shy of yesterday’s 111-15 best while the overnight high of 111-12+ stalled on approach to Tuesday’s 111-13+ peak. Busy US docket ahead, IJC, Philly Fed and leading index and Fed speak from Daly, Logan and Bowman.
• Bunds are marginally softer and nearing yesterday’s 132.25 base which resides just beneath the low-end of today’s 132.29-58 parameters. Region is focused on the upcoming ECB, though no policy change is expected now. Modest and fleeting pressure was seen following the Spanish auction given the robust French outing thereafter which served to bring OATs back above 125.00.
• Once again, Gilts had no real reaction to the morning’s UK data points. The labour series came in almost entirely in-line with expectations, pertinently showing an as-expected easing in the wage rate, and only had a slight dovish impact on BoE pricing. Currently pivoting the 98.57 opening level which is at the bottom-end of a very narrow 11 tick parameter that is entirely within Wednesday’s slim 98.31-66 band.
• Spain sells EUR 6.44bln vs exp. EUR 5.5-6.5bln 1.25% 2030, 3.45% 2034, 0.85% 2037 Bono.
• France sells EUR 11.49bln vs exp. EUR 9.5-11.5bln 1.00% 2027, 2.50% 2027, 2.75% 2030, 2.00% 2032 OAT.

Commodities

• Crude spent much of the morning on the front foot, though in recent trade, the crude complex has slipped off best levels, in tandem with today’s strength in the Dollar; Brent Sept currently trading around USD 84.90/bbl.
• Firmer trade across precious metals this morning despite a somewhat resilient DXY, but with broader European sentiment tilting lower, particularly in the stock market.
• Mixed trade across base metals amid a lack of drivers this morning, and with the China Third Plenum Communique offering little in terms of explicit stimulus commentary.
• Russian President Putin held a phone call with Saudi Crown Prince MBS, while they noted the importance of cooperation within OPEC+ to ensure energy market stability and both highly appreciate friendly relations between their countries, according to the Kremlin.

Geopolitics

• Russian Deputy Foreign Minister says Moscow does not exclude deployment of missiles with nuclear warheads in response to deployment of US missiles in Germany, according to Interfax

US Event Calendar

• 08:30: July Initial Jobless Claims, est. 229,000, prior 222,000
  • July Continuing Claims, est. 1.86m, prior 1.85m
• 08:30: July Philadelphia Fed Business Outl, est. 2.9, prior 1.3
• 10:00: June Leading Index, est. -0.3%, prior -0.5%
• 16:00: May Total Net TIC Flows, prior $66.2b

Central Banks

• 10:00: Fed’s Goolsbee on Yahoo Finance
• 13:45: Fed’s Logan Gives Opening Remarks
• 18:05: Fed’s Daly Participates in Fireside Chat
• 19:45: Fed’s Bowman Gives Keynote Address

DB’s Jim Reid concludes the overnight wrap

 

 

 

Authored by T J Muscaro via The Epoch Times,

The International Space Station (ISS) is coming down.

NASA and SpaceX leaders announced their plan on July 17 to retire the ISS safely while maintaining an uninterrupted human presence in low Earth orbit.

Using the $843 million contract it won in June, SpaceX will create a one-off variant of the Dragon Cargo spacecraft that will direct the ISS into a controlled re-entry over a still-undecided area of ocean by 2030.

NASA unveils concept of the SpaceX-designed US Deorbiting Vehicle (USDV) on July 17, 2024. (NASA)

Sarah Walker, SpaceX’s director of Dragon mission management, said the vehicle will have an enlarged service module or “trunk” that will hold six times more propellant—more than 35,000 pounds—and four times more power than the current Dragon spacecraft.

SpaceX and NASA shared concept art of the US Deorbiting Vehicle on X in the lead-up to the press conference.

Dana Weigel, manager of NASA’s International Space Station Program, said that the deorbiting vehicle will be launched “about one to one-and-a-half years before final reentry.”

Once docked, the ISS will “drift down” to 220 km (136 miles) above the Earth’s surface over the following year.

Once in position, the vehicle will fire its 30 Draco engines for a series of burns setting up for a final re-entry burn four days later.

The deorbiting vehicle will be tasked with firing its engines to keep the station on course and powering it when comes into contact with thickening layers of the upper atmosphere during its descent.

NASA plans to fully utilize the station with a human crew for as long as possible, aiming to maintain occupation for up to six months before re-entry.

Three private companies are currently developing their own free-flying space stations.

One of which, Axiom, plans to connect its first modules to the ISS in its early development.

NASA is aiming to overlap operations on the ISS and private space stations before re-entry, ensuring its ongoing streak of human presence in space continues.

More than $1 billion is wanted for the monumental project, and NASA officials told reporters that each space agency connected to the ISS—including JAXA, the ESA, and the Russian space agency Roscosmos—would contribute based on their percentage of the station’s overall mass.

All ISS partners have already been briefed and agree with the overall plan.

Elon Musk’s private spacefaring company will only be designing the orbit-bound vehicle while NASA will be responsible for the launch vehicle.

Ms. Weigel said that a “dwell in storage” requirement was added to the contract, demanding SpaceX deliver the spacecraft in a timely manner, allowing NASA to have it on hand, even if they have to delay the flight.

By modifying actively flying spaceships, SpaceX is incorporating hardware that is already NASA-certified and flight-proven.

However, despite the familiarity, Ms. Weigel said that the typical time to develop a new spacecraft is between five and eight years, which is why they saw a need to begin this project.

She said it usually takes three years to procure the rocket capable of launching the deorbiting vehicle into orbit.

The International Space Station is nearly 30 years old and has been continually occupied since November 2000.

It has been visited by 280 people from more than 20 countries, including more than 160 from the United States.

Former astronaut and space station crew member Ken Bowersox, current associate administrator of NASA’s Space Operations Mission Directorate, said he was “excited” to talk about the deorbit vehicle.

“It’s about the future,” he said. “It’s about what we’re gonna do out in the next decade. And it’s about preparing for that future, preparing for what we’re going to do with ISS.

“And so we can take our mind off what we do at the end of ISS and concentrate on getting as much as we possibly can out of it.”

But he and Ms. Weigel also said this launch into the future probably won’t preserve much of the past.

“There’s some little things up on ISS that I think we’ll probably want to bring home on the last cargo dragon that comes down,” Mr. Bowersox said, mentioning log books, mission patches, and some panels.

“I can’t see us affording any dedicated missions right now.”

Mr. Bowersox didn’t rule out the possibility of a salvage mission to the crash site or missions and funded requests from partner nations and museums such as The Smithsonian to secure would-be artifacts of a bygone era of space travel, but nothing is planned.

Authored by Jeffrey Tucker via The Brownstone Institute,

There is only one major social media platform that is relatively free of censorship.

That is X, once known as Twitter, and owned by Elon Musk, who has preached free speech for years and sacrificed billions in advertising dollars in order to protect it.

If we don’t have that, he says, we lose freedom itself. He also maintains that it is the best path to finding the truth. 

The crisis that broke out after the attempt on Donald Trump’s life put the principle in motion. I was posting regular updates and never censored. I’m not aware of anyone who was.

We were getting second-by-second updates in real time. The videos were flying along with every conceivable rumor, many false and then corrected, alongside free speech “spaces” in which everyone was sharing their views. 

During this time, Facebook and its suite of services fell silent, consistent with the new ethos of all these platforms. The idea is to censor all speech until it is absolutely confirmed by officials and then permit only that which is consistent with the press releases. 

This is the habit born of the Covid years, and it stuck. Now all the platforms avoid any news that is fast in motion, except to broadcast precisely what they are supposed to broadcast. Maybe that works in most times when people are not paying attention. Readers do not know what they are missing. The trouble was that during these post-shooting hours when nearly everyone on the planet wanted updates, there were no press releases forthcoming. 

By habit, I reached for what was once called television. The networks had plenty of talking heads and newscasters with their usual eloquence. What was missing from all the broadcasts that I saw in these hours were any factual updates. They too were waiting for confirmation of this or that before putting out any information at all beyond the basics. They let their “experts” speak as long as possible just to waste time before rolling out new advertisements. 

Over time, I realized something. X was driving the whole of the news, while the newscasters had to wait for permission before reading scripted lines. 

Meanwhile, on X, the situation was utterly wild. Posts were flying fast and furious. New rumors would circulate (the shooter’s name and affiliations, stories about a second shooting, claims that Trump was hit in the chest, and so on). But shortly after the rumor circulated, so did the debunking. The feature called “Community Notes” kept the faulty news in check, while the truth gradually circulated to the top. This happened on topic after topic. 

The wildest theories ever were permitted to appear, while others would debunk them with reasoned arguments. The readers could decide for themselves. You could see how the seeming chaos gradually organized itself into communities seeking verification. Posters grew ever more careful about posting claims that could not be verified, or at least explaining what they were. 

X was single-handedly holding the whole of the corporate media to account, and reporters and editors very obviously came to depend on their X feeds to figure out what to say next. It was the same with newspapers. When NYT, CNN, WaPo, and so on would make major missteps, posters on X would call them out, the word would reach the editors, and the headline or story would change. 

In the end, X became the one place where you could find the fullness of truth. All the while, the old-world media was dishing out the most ridiculous headlines one could imagine. For many hours, the New York Times, CNN, Washington Post, and other such venues refused to say it was an assassination attempt on Trump. The headline led people to believe that this was a MAGA rally with some random shooters that got carried away and so Trump had to be ushered out. This really did happen, and readers were outraged. 

CNN was probably the worst offender, with the following headline: “Secret Service Rushes Trump Offstage As He Falls at Rally.”

It took many hours and repeated attempts but eventually the mainstream media finally said that the incident was “being investigated” as an assassination attempt, even though it was very obvious that it was an attempt on his life that he barely survived with the slight turn of his head. 

It was the kind of flurry of nonsense that further discredited the old corporate media right there in front of an entire planet that was no longer believing anything they said. 

It’s hard to know why the corporate press did this. Were they just cautious and worried about misinformation? If so, how come so many of their headlines were of the same sort, that which refused to say that someone just tried to kill Trump? Were they just in the habit of waiting for officials to tell them what to say? Was it raw TDS that was driving this? It’s hard to know but the failure was conspicuous and obvious to all. 

What stood out above all else was the way free speech on X worked to ferret out the real story, while actually driving forward the mainstream press to correct its errors and get the story right. One shudders to think how it would have all taken place in absence of this one platform, which became the go-to place for everyone. The most important lesson: free speech worked. And beautifully. 

All Western societies are currently struggling with the question of just how much speech to allow on the Internet. The trajectory for years now has not been a good one. Once-free platforms have become more frozen, more propagandistic, more staid, and duller, even as this one platform has created a culture of freedom combined with community-driven accountability. 

This freedom accomplished exactly what it was supposed to accomplish, while the censored platforms held onto misinformation much longer than they should have been. 

Which makes the point. Too often, the battle over free speech is framed as misinformation/freedom vs. facts/truth/restriction. The very opposite has proven to be the case. The free platform proved itself capable of quick course correction alongside maximum agility in processing the floods of constant new information. Meanwhile, the venues in which “misformation” has been anathematized ended up being the major source of exactly that. 

Freedom works. As messy as it is, it works better than any other system. Meanwhile, governments of the world have targeted X for destruction. Advertisers continue to boycott and regulators continue to threaten. 

So far, it has not worked and thank goodness.

But for X, the last 24 hours would have looked very different: nothing but propaganda, apart from a few marginal places here and there.

Therein lies another irony: the way X is managed is increasing trust rather than reducing it. 

The lesson should be obvious. The answer to the problems of free speech is more of it. 

Billionaire heir Anant Ambani married Radhika Merchant in Mumbai this past weekend, in an opulent ceremony attended by politicians and celebrities, from India’s Prime Minister Narendra Modi and former UK prime ministers Boris Johnson and Tony Blair to Kim and Khloé Kardashian. The Ambanis, India’s wealthiest family and owners of the country’s largest private company, Reliance Industries, footed the bill for the extravagant three-day event, speculated to cost hundreds of millions of dollars.

Weddings look very different around the world, from the size of the guest list to how long festivities go on for, and of course, the cost.

As Statista’s Anna Fleck reports, according to data from the online wedding publication The Knot, an average wedding in the United States cost $35,000 in 2023, or around $300 per guest, when not accounting for jewelry, engagement rings or a honeymoon.

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It was followed by the United Kingdom at $28,500 or $320 per head, Spain at $25,700 or $210 per head, Italy at $23,900 or $220 per head and France at $21,800 or $220 per head.

The average wedding cost in India last year, according to the source, was closer to $25,000 for middle class couples; although around 15 percent were found to spend more than $45,000 on a wedding that year.

The Knot analysts add that the average middle class household makes $7,000 to $40,000 annually.

In terms of the average guest list size, then India comes first out of the 15 surveyed countries with 326 guests on average in 2023, followed by the U.S. with 146, Uruguay with 129, Brazil with 124 and Spain with 121.