White House Quiet As BBQ Inflation Roils Americans On July 4

White House Quiet As BBQ Inflation Roils Americans On July 4

This time last year, the White House bragged on Twitter about saving Americans 16 cents on their Independence Day barbecues. Just days before July 4, the sounds of crickets can be heard from the White House’s Twitter account as BBQ inflation roasts tens of millions of Americans this holiday weekend. 

Inflation under the Biden administration reached a four-decade high earlier this year. A stagflation-like environment settled in, and an unofficial recession could be underway (readWelcome To The Biden Recession). 

A new survey from the American Farm Bureau Federation shows the average cost for a cookout this weekend to feed about ten people will cost on average $70 — that’s up 17% or $10 compared to a year ago. 

Bloomberg breaks down barbecue inflation and finds ground beef prices are up a staggering 36% from a year ago, chicken up 33%, pork and beans +33%, pork cops +31%, lemonade +22%, and so forth. 

Meanwhile, Biden advisor Brian Deese told Americans to suck it up when it comes to soaring prices because “this is about the future of the Liberal World Order, and we have to stand firm.” 

Americans could care less about that world order but are starting to get perturbed how the Biden administration puts Ukraine first rather than its own people (taxpayers). 

Soaring consumer prices have been devastating for household finances, altering spending behaviors as an unofficial recession appears to have materialized. This comes as consumer confidence crashed in June. 

To avoid BBQ inflation, the prices of strawberries, sliced cheese, and potato chips have tumbled over the last year. We are surprised the administration has yet to tout these foods as cost savings. And it’s not just cookouts that are becoming more expensive this weekend — many Americans are paying near record-high gasoline and diesel prices as they travel in one of the busiest driving periods of the year. 

We’re sure a conversation piece at BBQs across America this weekend won’t be about abortion or guns, but instead, how ‘Biden-economics’ has failed most Americans. 

Tyler Durden
Mon, 07/04/2022 – 13:05

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Multiple People Shot During 4th Of July Parade In Chicago Suburb

Multiple People Shot During 4th Of July Parade In Chicago Suburb

A Chicago suburb canceled what was left of its 4th of July celebration after gunfire erupted during a parade in the affluent neighborhood of Highland Park, according to NBC5 Chicago.

The Chicago Sun Times reports that multiple people were shot.

A Sun-Times reporter saw blankets placed over three bloodied bodies. Other people, running, were visibly bloodied. Police told people: “Everybody disburse, please. It is not safe to be here.”

Blood pooled at Port Clinton Square in Highland Park. Lynn Sweet/ Sun-Times

“STAY OUT OF THE AREA – allow law-enforcement and first responders to do their work,” posted the sheriff on social media, while Illinois state police called the situation “active.”

More via the Sun Times:

Several witnesses said they heard multiple shots fired. One witness said he counted more than 20 shots.

Miles Zaremski, a Highland Park resident, told the Sun-Times: “I heard 20 to 25 shots, which were in rapid succession. So it couldn’t have been just a handgun or a shotgun.”

Zaremski said that after the shots at Central Avenue around Second Avenue in downtown Highland Park, he saw “people in that area that got shot,” including “a woman covered with blood . . . She did not survive.”

Police were patrolling the area with rifles, apparently looking for whoever fired the shots.

Adrienne Drell, a former Sun-Times reporter, said she was sitting on a curb along Central Avenue watching the parade when she saw members of the Highland Park High School marching band start to run.

“Go to Sunset,” Drell said she heard the students shout, directing people to nearby Sunset Food.

A man picked her up off the curb and urged her to get out, Drell said.

“The Illinois State Police is currently assisting Highland Park PD with an active shoot situation that occurred at the Highland Park Parade,” tweeted the police. “The public is advised to avoid the area of Central Ave and 2nd St. in Highland Park.”

The city of Highland Park also cautioned people to avoid the area, writing on Facebook: “Fourth Fest has been canceled. Please avoid downtown Highland Park. More information will be shared as it becomes available.”

Tyler Durden
Mon, 07/04/2022 – 12:46

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DHS Issues July 4th Warning As Roe v. Wade Reversal Has “Heightened” Threat Environment

DHS Issues July 4th Warning As Roe v. Wade Reversal Has “Heightened” Threat Environment

Authored by Jack Phillips via The Epoch Times,

The head of the Department of Homeland Security announced Sunday that there is a “heightened threat environment” in the aftermath of recent Supreme Court decisions that were handed down.

“We have seen a heightened threat environment … over the last several months over a number of different volatile issues that galvanize people on different sides of each issue,” Secretary Alejandro Mayorkas told CBS News on Sunday.

“We in the Department of Homeland Security become involved when there’s a connectivity between the- the opposition to a particular view or an ideology of hate, a false narrative, and violence.”

His department is “very mindful that the Supreme Court’s decision in reversing and overturning Roe v. Wade has really heightened the threat environment and we have deployed resources to ensure the safety and security of the Supreme Court and the justices,” Mayorkas added.

“We do not condone violence and law enforcement will and has responded to acts of violence when people do not honor their freedom to protest peacefully, but instead violate the laws of our country and the states within it.”

Protesters have gathered outside justices’ homes in Maryland and Virginia in recent weeks after a draft of the Roe decision was leaked to the press. Federal law stipulates that it is illegal to pressure a judge into issuing a certain ruling or interfering with their work.

Read more here…

Tyler Durden
Mon, 07/04/2022 – 12:40

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100-Year-Old Veteran Laments “This Is Not The Country We Fought For”

100-Year-Old Veteran Laments “This Is Not The Country We Fought For”

Presented with little comment, aside from to suggest that we take a few brief minutes to stop and listen to what World War II veteran Carl Dekel has has to say on his 100th brithday:

“Nowadays… People don’t realize what they have, the things we fought for, and the boys that died for it – It’s all gone down the drain.”

Our country’s gone to hell in a handbasket. We haven’t got the country we had when I was raised. Not at all.”

Choking back tears the Marine reflected on his brothers in arms who died in combat:

“It’s not the same. That’s not what our boys – that‘s not what they died for.”

“People don’t realize what they have. They bitch about it.”

Spend less than three minutes of your ‘independence’ day listening to what :

Despite expressing his grave fears for the future, Deke noted that his 100 years has taught him to “just remember everything’s beautiful and live every day to the fullest. Just enjoy everything you possibly can.”

The Greatest Generation will soon be gone forever. Will their message get through or is it too late (or are we too blind) to understand the mistakes of the past.

Tyler Durden
Mon, 07/04/2022 – 12:20

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Here We Go Again: The Fed Is Causing Another Recession

Here We Go Again: The Fed Is Causing Another Recession

Authored by Jon Wolfenberger via The Mises Institute,

Cause of the Boom-Bust Business Cycle

The primary cause of the recurring “boom and bust” business cycle is central banks like the Federal Reserve creating money out of thin air. This was first explained by Austrian economist Ludwig von Mises over a century ago. His student F.A. Hayek won the 1974 Nobel Prize in economics for his work on this theory, which is now known as Austrian business cycle theory.

The basic outline of Austrian business cycle theory is as follows:

  1. the government “central bank” (in the US, it is the Federal Reserve or “Fed”) creates money out of thin air (they effectively “print it,” although typically in the form of digital entries now), usually by buying Treasury bills or bonds from commercial banks, which then …

  2. is deposited in commercial banks which, through the process of fractional reserve banking (where banks are legally allowed to keep only a fraction, such as 10 percent, of their deposits in cash reserves), create even more money out of thin air to lend to their customers, which then …

  3. leads to lower interest rates than would prevail in a free market without a central bank and fractional reserve banks legally creating money out of thin air, which then …

  4. causes businesses and consumers to borrow the newly created money to invest in long-term projects such as mines, factories, houses, etc., since the profitability of those investments appears higher now with a lower cost of capital, which then …

  5. leads to the unsustainable “boom” phase of the business cycle where scarce capital is misallocated to unsustainable investments since the real resources of raw materials, equipment and labor needed to finish these long-term projects are not physically available; while paper money may literally grow on trees, the actual scarce resources needed to create goods and services do not (printing money does not create the goods needed for profitable investment—if it did, Zimbabwe would be the wealthiest country in the world and we could all stop working, saving and investing); then …

  6. the higher money supply leads to higher price inflation, which raises production costs and usually causes the central bank to slow the growth rate of money supply and raise interest rates to try to lower inflation (if they do not, it will eventually lead to hyperinflation, which effectively destroys a functioning currency and economy), which then …

  7. leads to the “bust” phase of the business cycle, where the unsustainable investments are proven to be unprofitable and must be liquidated to allocate capital to the most productive uses that meet consumer desires.

As this theory shows, the dreaded boom and bust business cycle is not inherent in a free market economy. It is caused by the legal privilege granted to central and fractional reserve commercial banks to create money out of thin air. As Mises summarized:

True, governments can reduce the rate of interest in the short run. They can issue additional paper money. They can open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression.

Fed Panicked Over Covid

As a result of the stock market crash and global economic collapse caused by government covid policies in early 2020, the Fed panicked and aggressively increased the money supply by 40 percent, more than double the increase in the money supply in prior recessions, as shown below (which is the “Austrian money supply,” calculated as M2 less small time deposits and retail money market funds plus Treasury deposits at the Fed).

This massive money creation resulted in the highest inflation rates in over forty years, with the latest CPI report showing inflation at 8.6 percent, well above the Fed’s 2 percent target. And now that money supply growth has slowed substantially to only 7 percent —and the Fed-controlled monetary base (currency plus bank reserves at the Fed) is now declining 2.6 percent year over year — the economy is starting to slow.

Recession Signs Are Mounting…

Economic growth has already weakened substantially. US gross domestic product fell 1.4 percent in the first quarter of 2022 and the Atlanta Fed is now estimating 0.0 percent GDP growth in the second quarter.

Real personal income is down 3.5 percent year over year, and was down 17 percent in March, the biggest decline in over sixty years. Real manufacturing and trade sales are now down 2.5 percent year over year. This broad sales measure only declines in recessionary periods, as shown below (recessionary periods are shaded gray).

Interest rates have been skyrocketing due to high inflation and slower money supply growth. The ten-year Treasury yield increased from 1.19 percent last summer to 3.25 percent now, while the two-year Treasury yield increased from 0.13 percent last summer to 3.17 percent now. The thirty-year fixed mortgage rate has risen from 2.77 percent last summer to 5.78 percent now, which is causing a collapse in mortgage applications and homebuilder sentiment.

The “yield curve” spread between the ten-year and two-year Treasury yields has now flattened to only 0.08 percent. This spread “inverted” briefly a couple of months ago when the two-year yield rose above the ten-year yield. It could easily invert again soon. As shown below, a flattish or inverted yield curve spread between the ten-year and two-year Treasury yields has occurred before every recession in recent decades.

The spread between high-yield “junk” corporate bonds and Treasury yields has risen to the highest levels since the covid panic of 2020, as junk bond investors start to price in the risk of a recession, as shown below.

Copper is known as “Dr. Copper” for its ability to predict recessions due to its sensitivity to the economy. Copper prices have fallen 20 percent in the past three months.

Initial unemployment claims are the best leading indicator of employment. They have been rising steadily for the past three months, as shown below (weekly claims are the black line and the four-week moving average is the red line).

The University of Michigan Consumer Sentiment survey has fallen to the lowest levels in over forty years, as shown below.

Similarly, The Conference Board CEO Confidence survey has fallen to recessionary levels, as shown below.

Proven leading economic indices have weakened to recessionary levels. The Economic Cycle Research Institute’s Weekly Leading Index, which leads the US economy by at least six months, has declined from a high of around +28 percent last year to –6.3 percent now. This highly regarded economic forecasting firm has recently gone public with their forecast for a coming recession.

The Brave-Butters-Kelley Leading Index has fallen well below the –1 threshold that signals with 86 percent accuracy that a recession is likely to start within eight months, as shown below.

Now the Fed Is Trying to Crash Financial Markets and Cause a Recession

Normally, the Fed would be slashing interest rates and printing money to try to prevent a recession and stock bear market at this point, which they tried and failed to do in the early 2000s Tech Bust and 2008–09 Great Recession.

But instead, the Fed is being forced to hike rates aggressively to try to bring inflation down. They already hiked the Fed Funds rate to 1.50 percent to 1.75 percent and will need to hike at least 1.50 percent more to catch up to the two-year Treasury yield.

The Fed is explicitly saying they want to lower bond, stock and housing prices and raise unemployment. They say they can do all of that without causing a recession. That is clearly a fantasy.

As Bill Dudley, former president of the New York Fed and vice chairman of the Fed’s Federal Open Market Committee, has said in recent months:

The Fed’s application of its framework has left it behind the curve in controlling inflation. This, in turn, has made a hard landing virtually inevitable….

To create sufficient economic slack to restrain inflation, the Fed will have to tighten enough to push the unemployment rate higher….

Getting inflation down will be costly, in terms of jobs and economic growth….

Investors should pay closer attention to what Powell has said: Financial conditions need to tighten. If this doesn’t happen on its own (which seems unlikely), the Fed will have to shock markets to achieve the desired response. This would mean hiking the federal funds rate considerably higher than currently anticipated. One way or another, to get inflation under control, the Fed will need to push bond yields higher and stock prices lower….

So far, financial conditions really haven’t tightened very much….

The Fed has to push up the unemployment rate, when the Fed has done that in the past, it has always resulted in a recession….

It is very unlikely that a year from now we will be at this level of bond yields this low and this level of stock prices this high.

As shown below, despite the stock and bond bear markets, financial conditions remain very easy, according to the Chicago Fed National Financial Conditions Index.

Conclusion

If the Fed succeeds in tightening financial conditions enough to try to maintain their reputation as an “inflation fighter” (i.e., trying to lower the inflation they created in the first place), this will likely be the biggest government-caused economic catastrophe since the Great Depression, as we predicted here last year.

Tyler Durden
Mon, 07/04/2022 – 12:00

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Bulgaria Expels 70 Russian Diplomats As Kremlin Says Kiev Must Accept ‘All Conditions’ To End War

Bulgaria Expels 70 Russian Diplomats As Kremlin Says Kiev Must Accept ‘All Conditions’ To End War

Russia’s says it’s preparing to respond in kind after Bulgaria expelled up to 70 Russian diplomats from its territory on Sunday. Starting June 28, the Bulgarian government declared that Russian diplomats in the eastern European NATO country “persona non grata” as they were “working against” Sofia’s interests, and they were given until July 3rd to depart Bulgaria.

Bulgaria’s acting Prime Minister Kiril Petkov said, “Anyone who works against the interests of Bulgaria will be called to go back to the country from which they came.”

Sofia, Bulgaria via EUReporter

The Associated Press confirmed on Sunday that “Two Russian airplanes were set to depart Bulgaria on Sunday with scores of Russian diplomatic staff and their families amid a mass expulsion that has sent tensions soaring between the historically close nations, a Russian diplomat said.”

Russia’s ambassador to Bulgaria had earlier stated that Moscow is ready to close its embassy in Sofia altogether in retaliation for the expulsions. Amb. Eleonora Mitrofanova issued Bulgaria an ultimatum days ago, saying, “I intend to urgently raise before the leadership of my country the issue of the closure of the Embassy of Russia in Bulgaria, which will inevitably lead to the closure of the Bulgarian diplomatic mission in Moscow.”

Meanwhile, Moscow is celebrating the complete capture of the cities of Lysychansk and Severodonetsk, effectively bringing the whole of Luhansk province under Moscow control. Crucially, Kremlin spokesman Peskov has on Monday asserted that for the war to end, Ukraine must agree to all of Russia’s conditions.

Russian presidential press secretary Dmitry Peskov earlier said that Ukraine “must understand Russia’s conditions, agree to them, sit down at the negotiating table, and sign a document.”

And in televised statements Monday, President Vladimir Putin has congratulated Russian troops for “achieving victory” over the region:

In a meeting televised by Russian state media on Monday, defense minister Sergei Shoigu reported to Putin the Russian advances in the area.

“Starting June 19, [Russian] formations and military units … in cooperation with units of the second corps of the people’s militia of the [self-proclaimed] Luhansk People’s Republic (LPR) and with the support of the southern group of troops … successfully carried out an offensive operation to liberate the territory of the Luhansk People’s Republic,” Shoigu said.

…Putin told Shoigu that the military personnel who contributed to fighting in LPR, will be rewarded for their “bravery,” and that they should now “rest.”

“Other military units, including the East and West military groups, they have to fulfil their tasks, according to the previously suggested plan,” Putin said. “I hope everything will be successful as it happened in the [Luhansk] area,” he added.

It’s widely believed that Russia will next push to secure the whole of the Donbas, and from there continue an assault against the major northeast city of Kharkiv.

As for deteriorating relations with Bulgaria, this was perhaps inevitable after in April Russian energy giant Gazprom had completely cut off gas flows to both Bulgaria and Poland.

Tyler Durden
Mon, 07/04/2022 – 11:40

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An American Declination Of Codependence

An American Declination Of Codependence

Authored by Brent Hamachek via HumanEvents.com,

The following address was delivered on Saturday, July 3rd, 2021 as part of the Red, White, and Blue Tour in Sturgis, South Dakota.

It was 245 years ago that a brave group of American colonists sent what was effectively a legal complaint to the King of England. Inspired by the English jurist William Blackstone, the complaint contained a list of the colonists’ grievances, then demanded their independence as compensation for damages. This citizen’s complaint is commonly known as the Declaration of Independence.

We won our independence, but we now suffer under a new sort of tyrant. We find ourselves bound by the invisible chains of codependence.

We celebrate July 4th, 1776, as our nation’s birthday. It is not, in the strictest sense, the date of our birth; nor is it even the actual year. Depending on how you choose to define it, our nation was actually “born” either in 1787 (with the signing of the Constitution), in 1788 (with the ratification of the Constitution), or in 1789 (with the convening of the First Congress). What then should we call July 4, 1776? It is the day we got pregnant. What followed was a long and bloody path toward liberation and birth.

Today, the Declaration of Independence is one of the (if not the) most cherished American documents. Its language is inspiring, and it reminds us of the incredible courage shown and the price paid by those who risked and gave all to secure for us the gift of freedom. It is a foundational part of our history.

But it is not a part of our present. We no longer are a distant colony living under the rule of an unreasonable king. We won our freedom, wrote a constitution, and built a new nation. Using the greatest ideas from the Enlightenment, our founding fathers started us on a path that led us to become the greatest nation in the history of Western Civilization.

We won our independence, but we now suffer under a new sort of tyrant. We find ourselves bound by the invisible chains of codependence. We are not being ruled unreasonably by others. Instead, we are unreasonably letting ourselves be ruled by the need to appear caring and helpful. We are supporting, perpetuating, and enabling the irresponsible and destructive behavior of our fellow citizens who are determined to fundamentally transform the tenets of Americanism.

It is, therefore, once again time for a statement to be made and for lines to be drawn. We cannot find the strength to restore our republic if we cannot first find the strength to set our own minds, bodies, and consciences free. It is time to formally and publicly decline to remain codependent.

WILLIAM BLACKSTONE.

THE DECLINATION

When in the course of human events, it becomes necessary for a group of people, who believe in the laws of nature and in nature’s God, to dissolve the codependent bands that (to their own great detriment) have connected them to others, a decent respect for the opinions of mankind require that they list the actions they intend to take in separation and rebellion.

Let it first be clear, we hold these truths to be self-evident:

  • That all Americans are created equal.

  • That they are endowed by their Creator with, and have had codified in their Constitution, certain inalienable rights. These include the right to life, liberty, the pursuit of happiness, and the right to act as we choose insofar as we do not compel others to act as we choose.

  • That these rights have been gradually eroded, both through public seizure and voluntary surrender.

  • And to continue to allow these rights to be denied to us by others—or worse, to voluntarily surrender our rights for the sake of and in appeasement to others—is immoral.

Since our present circumstance has become destructive toward the above-mentioned truths, it is the right of the American people to abolish the current state of affairs and to institute a new order, one based upon:

  • Self-understanding

  • Self-respect

  • Self-confidence

  • Self-determination

  • Self-preservation

History has shown that people are more disposed to suffer and stay silent while evils are sufferable than they are to stand up and fight on behalf of themselves. With respect to their perception vis-à-vis others, they also are inclined to be governed and inhibited by three types of fear:

  • The fear of losing something they think they have.

  • The fear of not getting something they want.

  • The fear of not being liked.

These fears can lead a free people to subjugate their own free will, and to establish in its place a sort of social codependence that erodes their freedoms and weakens their very God-given soul. But when a long train of abuses, usurpations, oppression, and persistent censorship leaves them no alternative, then it is their right—their duty—to throw off such suppression, as well as their inhibitions.

Today’s true Americans have spent so much time trying to prove who and what they are not that they have forgotten who and what they are. That ends now.

AMERICAN REVOLUTIONARY WAR.

Therefore, we are resolved that from this moment forward, in declining our codependence on those who do not hold to our truths, that we shall:

  1. Break loose from the self-fitted chains and shackles of political correctness.

  2. Take back our language: no longer will we surrender words and phrases from our language to others. We will use the words we choose, regardless of their contemporary characterization or classification by others.

  3. Not be made to condemn or apologize for the actions of others. Likewise, we will not be made to applaud or affirm the behavior of others. We will apologize only for our own actions, when we feel it appropriate, and we will salute others only when we are personally so moved.

  4. Never deny our friendships or turn our backs on those of us who are being attacked by others simply because it is easier, convenient, or avoids confrontation.

  5. In accordance with the above, we will not hesitate to intervene in a situationally appropriate manner when we see one of our fellow citizens coming under attack. To turn away is to become complicit.

  6. Let those around us know that when they attack any one of us, they attack all of us.  e will not tolerate the phrase “but I didn’t mean you.”

  7. Embrace the classical notions of being masculine and feminine whenever and however we choose, and we shall not make excuses or issue apologies for so doing.

  8. Be skeptics at every turn when someone claims to be an “expert,” an “authority,” or a follower of “science.”

  9. Not allow ourselves ever to use the excuse “I was just following orders” to serve as a reason for engaging in or helping to silence or harm our fellow citizens.

  10. Not engage in defending ourselves when we are called “racist,” when we are called “homophobic,” when we are called “privileged,” when we are called “xenophobic,” or when we are labeled by anyone other than ourselves. We will not respond by giving examples of people we know or things we have done to prove what we are and what we are not. We do not need to try to justify ourselves or disprove baseless accusations to others. We will simply respond: “Your words. Not mine.”

  11. Embrace our faith in God if we possess such faith, without reservation. We may wear it on our sleeves, or we may keep it to ourselves. We will display our faith however we so choose, and will not deny the existence or importance of our faith for the sake of providing false comfort to others.

  12. Refuse to acknowledge the need for and legitimacy of “safe spaces” or “microaggressions.”  Simply because someone else decides they are threatened or offended will not be a reason for us to question our beliefs, our words, or our actions.

  13. Call “lies” by their proper name—which is “lies.”

  14. Not give the benefit of the doubt to those who seek to silence us or control us by presuming they are of good intentions. We will take them at their word and assume they mean and intend exactly what they say.

  15. Take great care in using terms such as “courage” and “bravery,” understanding that those terms have become corrupted in their use to signify simple acts of hate and defiance. We know true courage and bravery when we see it, and we will not lose sight of either.

  16. Be unwavering and undeterred in proclaiming that the interests of American companies, workers, and citizens must be placed above all other interests when it comes to matters of policy.

  17. Look directly at God, ourselves, and another human being every single day and say these words out loud: “I know who I am.”

SIGNING OF THE DECLARATION OF INDEPENDENCE.

We, therefore, the free people of the United States of America, do solemnly publish and declare our new independence by declining to be codependent upon those who seek to do us harm. There can be no harsher sentence served upon a people than that of being held prisoner to the approval of others.

We recognize that, in making this Declination, we place ourselves at risk of various forms of reprisal. We do so, knowing that the truest expression, the fulfillment of individual freedom, is the willingness to place that freedom at risk for the purpose of preserving it, so that future generations of Americans might enjoy it.

As we join in this Declination, we do so with a firm reliance on the protection of divine Providence, and we mutually pledge to support each other with our lives, our fortunes, and our sacred honor.

*  *  *

This article is part of a Human Events Opinion Special Collection released July 4th, 2021: “INDEPENDENCE DAY 2021.” You can read the other pieces in the collection here.

Tyler Durden
Mon, 07/04/2022 – 11:20

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Key Events This Week: All Eyes On Payrolls

Key Events This Week: All Eyes On Payrolls

It was another rollercoaster week – the 11th drop in the past 13 – which however ended with a monster rally in bonds and stocks as markets priced in the coming Fed rate cuts, and although it’ll likely be on the quieter side in markets today, we won’t be able to escape the near-term recession risks for very long. As we noted last week, the Atlanta Fed Q2 tracker is now at -2.08% after slumping into negative territory at the end of last week, and if this is close to the mark that would mean two negative quarters and a technical recession.

The official definition is owned by the NBER and they will likely need more evidence (and a political green light or three) before they would declare it as they look at a broader range of indicators than just headline growth. However we’ll likely know we’re in it before it’s declared so it’ll be crucial to work out if this is the start to a descent into bigger problems or if that’s still some months away. Note, as Deutsche Bank’s Jim Reid notes, it continues to be “when not if”.

A big swing factor here could be employment and this week is jam packed with US labor data. Payrolls (Friday) will be the headliner but JOLTS (Wednesday), ADP and claims (Thursday) will also be very important. As Jim Reid notes, labor markets remain strong around the world and although this is a generally a lagging indicator, some kind of turn should occur before we can declare what is absolutely the inevitable dive into recession (there is an outside chance of a negative print as soon as this Friday).

For what it’s worth, DB economists expect payrolls to slow (+225k forecast vs. +390k previously) but with unemployment falling a tenth to 3.5%. In many ways JOLTS (Wednesday) is the preferred employment measure although it has the disadvantage of being even more delayed as it is a month behind so we’ll only get May’s data this week. In the report, job openings have remained roughly 4.5mn above where they were prior to the pandemic so unless this dips there will still be a lot of demand for labor and the tightness will continue, leaving the Fed with a huge dilemma as growth slows. June’s US services ISM on Wednesday will be watched for the headline growth implications and also the employment component which has been ‘only’ hovering around 50 in recent months.

It’s worth noting, as DB’s Reid does, that the increased growth pessimism towards the end of last week stabilized equities as a big rally in bonds and a more dovish repricing of the Fed kicked in. 10yr Treasuries rallied -25.0bps last week (-13.3bps Friday), their largest weekly decline since March 2020, and although the S&P 500 finished -2.21% lower, it did rally +1.06% on Friday on lower yields as Fed expectations kicked in.

Back to the week ahead and we’ll see how central banks were thinking about this weak growth vs labor tightness dilemma in the minutes from the Fed’s (Wednesday) and ECB’s (Thursday) June meetings but this will be slightly dated in light of how rapidly the macro is evolving.

Elsewhere, trade and industrial data will be due from key economies globally. May trade data will be out for the US (Thursday), Germany (today), Japan and France (Friday). For the US, May factory orders will be released tomorrow, followed by June’s ISM services index on Wednesday. In Europe, the Eurozone’s PPI for May is due today, followed by May industrial production for Germany (Thursday) and France, June PMIs for Italy (Tuesday), and Germany’s May factory orders (Wednesday).

In Asia, the highlight will perhaps be the Caixin services and composite PMIs for China and the RBA meeting taking place tomorrow. Our economists expect the central bank to hike by +50bp.

Courtesy of DB, here is the full week ahead calendar day-by-day

Monday July 4

  • Data: Japan June monetary base, Germany May trade balance, Eurozone May PPI, Canada June PMI
  • Central banks: ECB’s Nagel and Guindos speak, BoC’s Business Outlook

Tuesday July 5

  • Data: US May factory orders, China June services and composite Caixin PMIs, Japan May labour cash earnings, France May industrial and manufacturing production, Italy June services and composite PMI, deficit to GDP Q1, UK June new car registrations, official reserves changes, Canada May building permits
  • Central banks: BoE’s financial stability report, BoE’s Tenreyro speaks. RBA meeting.

Wednesday July 6

  • Data: US June ISM services index, May JOLTS report, China June foreign reserves, Germany May factory orders, June construction PMI, UK June construction PMI, Eurozone May retail sales
  • Central banks: FOMC June meeting minutes, ECB’s Rehn speaks, BoE’s Pill and Cunliffe speak

Thursday July 7

  • Data: US May trade balance, June ADP employment change, initial jobless claims, Japan May leading and coincident index, Germany May industrial production, Canada May international merchandise trade
  • Central banks: ECB’s account of June meeting, Fed’s Waller and Bullard speak, BoE’s decision maker survey, BoE’s Mann speaks, ECB’s Lane, Stournaras, Centeno and Herodotou speak

Friday July 8

  • Data: US June nonfarm payrolls report, unemployment rate, participation rate, average hourly earnings, May wholesale trade sales, consumer credit, Japan June Economy Watcher survey, bank lending, bankruptcies, May household spending, trade balance, France May trade balance, Italy May industrial production, Canada June net change in employment, unemployment rate, hourly wage rate, participation rate
  • Central banks: Fed’s Williams speaks, ECB’s Lagarde and Villeroy speak

* * *

Finally, looking at the US, Goldman notes that the key economic data releases this week are the JOLTS job openings and ISM services reports on Wednesday, and the employment situation report on Friday. The minutes from the June FOMC meeting will be released on Wednesday and there are several speaking engagements from Fed officials, including Governor Waller and presidents Williams and Bullard.

Monday, July 4

  • There are no major economic data releases scheduled.

Tuesday, July 5

  • 10:00 AM Factory orders, May (GS +0.6%, consensus +0.5%, last +0.3%); Durable goods orders, May final (last +0.7%); Durable goods orders ex-transportation, May final (last +0.7%); Core capital goods orders, May final (last +0.5%); Core capital goods shipments, May final (last +0.8%): We estimate that factory orders increased 0.6% in May following a 0.3% increase in April. Durable goods orders increased 0.7% in the May advance report, and core capital goods orders increased 0.5%.

Wednesday, July 6

  • 09:00 AM New York Fed President Williams (FOMC voter) speaks: New York Fed President John Williams will make remarks at a virtual event on bank culture hosted by the New York Fed. On June 28, President Williams said, “In terms of our next meeting, I think 50 to 75 [basis points] is clearly going to be the debate. He added, “We’re far from where we need to be [regarding the federal funds rate]. My own baseline projection is we do need to get into somewhat restrictive territory next year given the high inflation…” He also indicated his growth forecast falls on the lower range among Fed officials: “I am expecting growth to slow this year, quite a bit, relative to what we had last year, and actually to slow to probably 1% to 1.5% GDP growth.”
  • 09:45 AM S&P Global US services PMI, June final (consensus 51.6, last 51.6)
  • 10:00 AM ISM services index, June (GS 54.4, consensus 54.0, last 55.9): We estimate that the ISM services index declined 1.5pt to 54.4 in June. Our forecast reflects sequential weakness in construction and real estate activity and the decline in our services tracker (-2.6pt to 53.9).
  • 10:00 AM JOLTS job openings, May (consensus 11,000k, last 11,400k)
  • 02:00 PM FOMC meeting minutes, June 14-15 meeting: The FOMC increased the federal funds rate target range by 75bp to 1.5%-1.75% at its June meeting. The median dot in the Summary of Economic Projections (SEP) showed a funds rate midpoint of 3.375% at end-2022. The statement dropped the expectation of a strong labor market, instead emphasizing that the Committee is “strongly committed” to returning inflation to target. The SEP showed a 0.5pp increase in the unemployment rate by end-2024 and below-potential GDP growth in 2022 and 2023.
  • On June 22, Chair Powell reiterated that the Fed will make “continued expeditious progress toward higher rates,” and noted “financial conditions have already priced in additional rate increases, but we need to go ahead and have them.” Chair Powell also noted that the Fed would not engage in active sales of mortgage-backed securities anytime soon. He emphasized that while the FOMC is “not trying to provoke and do not think we will need to provoke a recession,” it remained “absolutely essential” for the Fed to restore price stability, and noted that it would be “very challenging” for the Fed to achieve a soft landing.

Thursday, July 7

  • 08:30 AM Trade Balance, May (GS -$84.7bn, consensus -$84.9bn, last -$87.1bn): We estimate that the trade deficit decreased by $2.4bn to -$84.7bn in May, reflecting an increase in exports in the advanced goods report.
  • 08:30 AM Initial jobless claims, week ended July 2 (GS 225k, consensus 230k, last 231k); Continuing jobless claims, week ended June 25 (consensus 1,330k, last 1,328k); We estimate initial jobless claims ticked down to 225k in the week ended July 2: 
  • 01:00 PM Fed Governor Waller (FOMC voter) speaks: Fed Governor Christopher Waller will participate in an interview during a virtual National Association for Business Economics (NABE) event. A moderated Q&A is expected. On June 18, Governor Waller said, “This week, the FOMC took another significant step toward achieving our inflation objective by raising the Federal Funds rate target by 75 basis points. In my view, and I speak only for myself, if the data comes in as I expect I will support a similar-sized move at our July meeting.” He added, “The Fed is ‘all in’ on re-establishing price stability.”
  • 01:00 PM St. Louis Fed President Bullard (FOMC voter) speaks: St. Louis Fed President James Bullard will discuss the economic outlook and monetary policy at an event hosted by the Little Rock Regional Chamber. A Q&A with media and audience is expected. When discussing the US economy on June 24, President Bullard said, “I actually think we will be fine. It is a little early to have this debate about recession probabilities in the US” and reiterated his call for “front-loading” rate hikes. He noted, “this is in the early stages of the US recovery – or US expansion, we are beyond recovery. It would be unusual to go back into recession at this stage. Interest-rate increases will slow down the economy, but will probably slow down to more of a trend pace of growth as opposed to going below trend. I don’t think this is a huge slowing. I think it is a moderate slowing in the economy.” On June 28, he published an essay on lessons from the 1974 and 1983 US policy responses to inflation.

Friday, July 8

  • 08:30 AM Nonfarm payroll employment, June (GS +250k, consensus +273k, last +390k); Private payroll employment, June (GS +200k, consensus +240k, last +333k); Average hourly earnings (mom), June (GS +0.3%, consensus +0.3%, last +0.3%); Average hourly earnings (yoy), June (GS +5.0%, consensus +5.0%, last +5.2%); Unemployment rate, June (GS 3.6%, consensus 3.6%, last 3.6%): We estimate nonfarm payrolls rose by 250k in June (mom sa), a slowdown from the +390k pace in May. Job growth tends to be strong in June when the labor market is tight as firms aggressively hire youth summer workers. However, the June seasonal factors have evolved significantly more restrictive—perhaps overfitting to the reopening-related job surges in June 2020 and June 2021—and represent a headwind of roughly 200k in our view. Additionally, Big Data employment indicators were generally weaker in the month, consistent with a possible drag from tighter financial conditions and modestly higher layoffs in the retail and tech sectors. We estimate an unchanged unemployment rate at 3.6%, reflecting a solid rise in household employment offset by a 0.1pp rise in labor force participation to 62.4%. We estimate a 0.3% rise in average hourly earnings (mom sa) that lowers the year-on-year rate by two tenths to 5.0%. The arrival of the youth labor force may have eased some of the upward pressure on wages, but we see scope for supervisory earnings to rebound after two weak months (we assume neutral calendar effects).
  • 10:00 AM Wholesale inventories, May final (consensus +2.0%, last +2.0%)
  • 11:00 AM New York Fed President Williams (FOMC voter) speaks: New York Fed President John Williams will make remarks at an event hosted by the University of Puerto Rico. A Q&A with media and audience is expected.

Source: DB, BofA, Goldman Sachs

Tyler Durden
Mon, 07/04/2022 – 11:10

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Rabobank: Global Recession?

Rabobank: Global Recession?

By Jane Foley, head of FX strategy at Rabobank

Copper prices plunged to a 17 month low on Friday, demonstrating the rise of recession fears. 

The metal, used in electrical circuits in everything from construction, cars and appliances is often traded as a bellwether for growth.  Copper is currently trading just above USD8,000 a tonne on the LME.  This compares with the year’s high around USD10,600 a tonne.  In a quiet Asian session ahead of the UK July 4 holiday, Asian shares crept a little higher this morning and US equities futures gained a little ground.  However, this is small comfort given the horrific ride for stocks in the first half of the year.

Friday’s releases of US May construction spending and June ISM manufacturing surveys both missed the mark and accentuated fears of a hard-landing.  The latter follows declines in the Chicago PMI, the Richmond Fed, Dallas Fed and Philly Fed.  Even ahead of Friday’s data releases estimates of Q2 US GDP growth were already being revised down, with some market estimates even pointing to the risk of technical recession in the US in H1 given the negative print for Q1 US GDP.   

As fears of a slowdown tightened their grip, treasury yields dropped with the short-end of the curve leading the way as market priced in a less aggressive trajectory for Fed rate hikes.

In Germany, Bloomberg data indicate that 2 year Bund yields registered their biggest weekly swing on record, in data dating back to 1990.  On Friday alone yields dropped as much as 24 bps.  A similar move was recorded by 2 year gilts as the market second guessed its assumption that the BoE could hike aggressively in the months ahead in the face of a painful cost of living crisis.

The turmoil in the bond markets also played out in foreign exchange.  EUR/USD plunged to 1.0366 on Friday afternoon before finding a little composure. Cable slipped all the way to 1.1976 before finding buyers.  Friday’s final June UK manufacturing PMI release recorded a weaker than expected outcome.  At 52.8, this was the lowest reading for the index since June 2020.  Of particular concern is the drop in the new orders index to 48.3, a level suggestive of contraction.

Despite the recession fears, most stocks US and European stocks indices closed the session in the green.  That said higher interest rates, and fears of falling demand clearly point to a rocky road for equity indices.  The forthcoming round of earnings report could be a difficult read for many investors.  While most commodity prices have dropped back sharply from their highs on the back of recessionary fears, energy security issues remain a huge concern in Europe.

European natural gas prices are on the rise again this morning with around 13% of Norway’s daily gas exports reportedly at risks due to strike action.  Over the weekend, the head of Germany’s energy regulator urged residents to conserve energy and to prepare for winter while Chancellor Scholz indicated that the government may be ready to support Uniper, the biggest buyer of Russian gas in Germany.  A week ago Germany’s Economy minister Habeck warned of gas shortages and production suspensions for industry on the back of energy security risks.  Clearly this has fed recessionary fears in the Eurozone.

Russia has now claimed full control of the Luhansk region after seizing the last Ukrainian stronghold.  Putin’s advisor Peskov has stated that Ukraine would have to agree to all of Russia’s conditions for the war to end.  The focus of the conflict now shifts to the neighbouring Donetsk region, where Kyiv maintains control of large territories.

Tyler Durden
Mon, 07/04/2022 – 10:50

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Are US Weapons Supplied To Ukraine Ending Up On DarkNet Marketplaces?

Are US Weapons Supplied To Ukraine Ending Up On DarkNet Marketplaces?

The lack of oversight for billions of dollars in US weapons pumped into Ukraine has concerned the Pentagon. They’re worried about anti-tank missiles and explosive drones ending up in the “wrong hands.”

A new investigation allegedly found some of these weapons are being sold on the dark web.

RT journalists pretended to be weapons buyers and claimed to have come in contact with Ukrainian arms smugglers offering machine guns, body armor, and some of the US/West’s most advanced weapons, such as Javelin and NLAW anti-tank systems or Phoenix Ghost and Switchblade explosive drones.

The journalist said one darknet marketplace had a Phoenix Ghost loitering munition listed for $4,000. 

 Another Ukrainian arms smuggler offered US-made body armor sets for $1,500 and M4 carbines with suppressors and hundreds of 5.56×45mm NATO rounds for $2,400 per set.

Besides US weapons, Ukrainian arms smugglers were selling British-made NLAW anti-tank systems for $15,000. Acquiring the anti-tank weapon legally would cost between $30,000 to $40,000. 

Since the journalist never completed transactions with the sellers, RT said, “it’s not possible to completely rule out that the sellers actually did not have the said weapons in stock, as the RT investigators did not complete the purchase. Scamming schemes are common for dark web marketplaces.”

As early as April, US officials began admitting that once Javelin anti-tank weapons cross into Ukraine, they have no idea where they go from there. 

One intelligence source told CNN:

“We have fidelity for a short time, but when it enters the fog of war, we have almost zero. It drops into a big black hole, and you have almost no sense of it after a short time.”

The European police agency Europol has also warned about the massive amount of weapons being pumped from the West into Ukraine. Once the weapons hit the ground, there’s no tracking the weapons from there, and some end up in criminal gangs’ hands. 

“The weapons from this war are still being used by criminal groups today,” Europol Director Catherine De Bolle told the German newspaper Welt am Sonntag in June. 

Last Thursday, the Pentagon’s Defense Security Cooperation Agency (DSCA) issued a statement urging US military leaders to send weapons inspectors into the war-torn country to monitor where the billions of dollars in arms are being handed out. 

RT’s investigation sheds important light on the Pentagon’s worst fears of high-tech weapons ending up in the wrong hands and some of the weapons for sale on the darknet. There may never be oversight and accountability of the weapons on the ground because, as the NYTimes recently said, the CIA has had a presence on the battlefield since the start of the invasion. When it comes to the CIA’s covert arms programs, they usually like to keep where the weapons are being sent a secret. 

Tyler Durden
Mon, 07/04/2022 – 10:30

via ZeroHedge News https://ift.tt/YmtWC1A Tyler Durden