Month: June 2023

Nearly 100 million people across 18 states, from New Hampshire to South Carolina, are under air quality alerts Wednesday morning, according to NBC News. A low-pressure system stuck off Nova Scotia is sending smoke from Canadian wildfires into the Northeast, Mid-Atlantic, and Southeast. 

According to the Canadian Interagency Forest Fires Centre, more than 400 wildfires are burning in Canada. The National Oceanic and Atmospheric Administration’s radar-based analysis shows smoke from the wildfires pouring in from eastern Ontario and into the US. 

On Tuesday night, New York City had the worst air pollution of any major city in the world, according to the IQAir website. Many other major US cities were blanketed in haze with air quality levels deemed “unhealthy.” 

“EVERYONE should avoid the outdoors,” one meteorologist tweeted. 

NEW YORK CITY: Prepare for air qualities WORSE than yesterday.

Likely in the code red to code purple category.

A wall of dense wildfire smoke will arrive by noon.

— Visibilities below 3 miles
— You’ll taste the smoke
— Your eyes will sting

EVERYONE should avoid the outdoors. pic.twitter.com/JrEce3vLFV

— Matthew Cappucci (@MatthewCappucci) June 7, 2023

This morning, residents along the East Coast woke up to the following:

The Statue of Liberty in New York City is covered in haze and smoke caused by wildfires in Canada https://t.co/gni41b3v0i 📷 Amr Alfiky pic.twitter.com/Uj9kdKENTT

— Reuters Pictures (@reuterspictures) June 7, 2023

New York City. Looking south down the East River, past the tip of Roosevelt Island.
Sky above a section of the 59th St Bridge, filled with Canadian wildlife smoke.
All from the hospital waiting area. Hope to be home soon. pic.twitter.com/uzIRvVkswn

— Alan Cialino (@AlCialino) June 7, 2023

930 am 6/7/2023 smoke haze in DC over Memorial Bridge #CanadaWildfires pic.twitter.com/oDDOukkP4r

— KayAnn Schoeneman (@KSchoeneman) June 7, 2023

Flying through the smoke out of Baltimore this morning omg pic.twitter.com/bBKnhD3YqS

— big honkin caboose (@itsmegangraves) June 7, 2023

Haze and the smell of smoke continue in Baltimore this morning as Canada wildfires smoke blows east pic.twitter.com/OT8bOmxCOr

— Justin Fenton (@justin_fenton) June 7, 2023

Richard Bann, a forecaster at the US Weather Prediction Center, told Bloomberg:

“Relief is not coming anytime soon.

“For the time being the Northeast US is in a position where it going to continue to ebb and flow with the thickness and intensity of the smoke.”

Meanwhile, NBC News is pushing masks: “If you need to spend time outside in smoke, a mask can help.”

Perhaps El Nino is to blame. 

Two days ago Australia shocked the market when it unexpectedly hiked rates to 4.1%, an 11 year high, and warned of more hikes to come. Today, it was Canada’s turn.

Moments ago the BOC also hiked its overnight rate to 4.75% – the highest rate since 2001 – surprising median consensus which expected the central bank to extend its “pause” and remain unchanged from last month at 4.50%.

The hike was expected by only about one in five economists in a Bloomberg survey, and markets had put the odds at about a coin flip.

The Bank of Canada said that the “overall, excess demand in the economy looks to be more persistent than anticipated,” the bank said in its rate statement, which wasn’t accompanied by a new set of forecasts…. Governing Council decided to increase the policy interest rate, reflecting our view that monetary policy was not sufficiently restrictive to bring supply and demand back into balance and return inflation sustainably to the 2% target.” The bank also said that it “will be evaluating whether the evolution of excess demand, inflation expectations, wage growth and corporate pricing behaviour are consistent with achieving the inflation target” and added that it “remains resolute in its commitment to restoring price stability for Canadians.”

Some more details from the statement:

• Governing Council will continue to assess the dynamics of core inflation and the outlook for CPI inflation. In particular, we will be evaluating whether the evolution of excess demand, inflation expectations, wage growth and corporate pricing behaviour are consistent with achieving the inflation target.

• Bank continues to expect CPI inflation to ease to around 3% in the summer as lower energy prices feed through and last year’s large price gains fall out of the yearly data.

• However, with three-month measures of core inflation running in the 3!4-4% range for several months and excess demand persisting, concerns have increased that CPI inflation could get stuck materially above the 2% target.

• The labour market remains tight: higher immigration and participation rates are expanding the supply of workers but new workers have been quickly hired, reflecting continued strong demand for labour. Overall, excess demand in the economy looks to be more persistent than anticipated

• Demand for services continued to rebound. In addition, spending on interest-sensitive goods increased and. more recently, housing market activity has picked up.

Since declaring a conditional pause in January, policymakers have warned that further rate increases may be necessary. And while some Canadians are feeling the pinch of steeper borrowing costs, the bank’s move from the sidelines suggests officials are worried that economic momentum won’t slow enough without another hike.

“Monetary policy was not sufficiently restrictive to bring supply and demand into balance and return inflation sustainably to the 2% target,” the bank said, citing an “accumulation of evidence” that includes stronger-than-expected first quarter output growth, an uptick in inflation and a rebound in housing-market activity.

The move follows a surprise 25 basis-point boost Tuesday by the Reserve Bank of Australia.

As Bloomberg reminds us, the Bank of Canada was the first and only Group of Seven central bank to pause its hiking cycle. Now it’s changed its mind, conceding that higher borrowing costs are still required to bring inflation to heel in an economy that’s proving more resilient than anticipated.

Understandably, the central bank also removed the April language about being prepared to raise rates further if needed. Here is a full redline comparison between the two most recent statements:

BoC chief Macklem and his officials pointed to elevated three-month moving measures of underlying price pressures as a key reason for their move. “Concerns have increased that CPI inflation could get stuck materially above the 2% target,” they said.

The statement was light on forward-looking commentary, suggesting policymakers aren’t yet sure whether the move will end up as a fine tuning or the start of another series of increases. Officials said they plan to examine how excess demand, inflation expectations, wage growth and corporate pricing behavior evolve.

In kneejerk response, the loonie rallied: the USDCAD fell from 1.3384 to 1.3320 before paring back to 1.3350…

… while Bonds dropped, pushing the Canada two-year yield to 4.473%, up about 10 basis points, the highest since August 2007.

Finally, we note that rate-hike odds for The Fed are on the rise, as investors reflect on Canada’s inflation/jobs data…

…and note how similar it looks to what The Fed is facing.

Following yesterday’s Kakhovka dam explosion and as flooding continues to wreak disaster for towns and villages downstream in Ukraine’s south, the International Atomic Energy Agency (IAEA) is assuring Ukraine and the world that the dam break is posing “no short-term risk” to Europe’s biggest atomic plant.

While falling water levels have been observed in a reservoir used to cool the reactors for the Russian-occupied Zaporizhzhia nuclear power station, the late Tuesday IAEA statement cited “no short-term risk to nuclear safety and security.”

The Zaporizhzhia plant sits some 150 kilometers, or 90 miles upstream of the dam on the on the Dnipro River. The ‘no immediate risk’ assessment is also based on the facility having “back-up options available,” according to the IAEA as cited in AFP.

Ukrainian leaders while trying to lay quick blame on Russia, which the Kremlin has rejected, asserted Tuesday that the world “once again finds itself on the brink of a nuclear disaster” – according to the words of presidential aide to Zelensky, Mykhaylo Podolyak. Local authorities estimate that some 42,000 residents are at risk and in the flooding disaster zone.

“The water went up in an instant,” said one resident downstream. “In the morning there was nothing.”

IAEA chief Rafael Grossi has painted a picture of the dam breakage being very concerning but not unmanageable for Europe’s largest nuclear power plant: 

Water levels were dropping by nine centimeters (3.5 inches) per hour in the reservoir above the dam, up from five centimeters early on Tuesday, IAEA head Rafael Grossi said in a statement.

Water in the reservoir was at around 15.44 meters late Tuesday, he added. When the level drops below 12.7 meters, then water can no longer be pumped to the plant, Grossi warned.

“As the full extent of the damage to the dam is not yet known, and the water loss rate is fluctuating, it is not possible to predict exactly when this might happen,” Grossi said, adding that the key level “could be reached in the next couple of days.”

Video showing the flooding and devastation in Russian-occupied Oleshky, Kherson oblast, a day after the Kakhovka Dam under Russian forces’ control was destroyed. pic.twitter.com/k6ys9rnjij

— Christopher Miller (@ChristopherJM) June 7, 2023

But, Grossi emphasized, the plant operators already have experience of implementing fail-safe backup procedures throughout the war thus far, and the reactors have already been shut down – yet they still need cooling water to prevent nuclear meltdown.

According to more of Grossi’s words via AFP: 

Existing water at the plant in cooling ponds and elsewhere can then still be used “for some time” to cool the reactors and the spent fuel pools in the reactor buildings, Grossi added.

Additionally, a large cooling pond next to the site is “currently full and has enough in storage to supply the plant for several months as its six reactors are in shutdown mode,” Grossi said.

“It is therefore vital that this cooling pond remains intact… I call on all sides to ensure nothing is done to undermine that,” Grossi told a meeting of the agency’s board of governors, adding he will visit the plant next week. 

The plant can also access a deep water-filled excavation in its cargo port area, as well as the water system of the nearby city of Enerhodar and use mobile pumps and firefighter trucks to fetch water.

Plant staff have already implemented measures to limit the consumption of water, using it only for “essential nuclear-safety related activities.”

“There is a preparedness for events like this (the dam being damaged)… But clearly, this is making an already very difficult and unpredictable nuclear safety and security situation even more so,” Grossi said.

…”Absence of cooling water in the essential cooling water systems for an extended period of time would cause fuel melt and inoperability of the emergency diesel generators,” Grossi warned.

All of this means that the situation is worsening but there is still “time” to look for solutions, according to authorities overseeing the plant. 

Kherson. Hundreds of residential buildings flooded. pic.twitter.com/NB2jeCdN0X

— NEXTA (@nexta_tv) June 7, 2023

Meanwhile, many thousands in the region impacted by the Kakhovka dam collapse continue to be evacuated, and international media reports have said there’s likely an unknown number of casualties from the rising flood waters.

Ukrainian officials have predicted that by Thursday water levels of the Dnipro will rise another 3 feet, and will engulf more areas downstream along the banks. Kherson oblast could see flooding for at least another ten days. Area residents’ access to clean drinking water is also being impacted. 

By Philip Marey, Senior US Strategist at Rabobank

Battleground Preparation

Yesterday, battleground preparation in Ukraine took a new turn with the destruction of the Kakhovka dam. In addition to the flooding, this will restrict the water supply and Ukraine’s agricultural output, pushing up global prices of grains and other produce. The Zaporizhzhia nuclear power plant is also dependent on water supply from the dam reservoir, but is said to have sufficient reserves and could be supplied by other means. Both sides, Ukraine and Russia, are denying responsibility, but Western intelligence agencies are leaning toward Russia. The flooding definitely reduces Ukraine’s options for its long-awaited counteroffensive.

This morning, the 7.5% decline (year-on-year) in China’s exports beat the Bloomberg consensus of a more modest 1.8% decrease. This adds to concerns about global demand as higher interest rates and persistent inflation are eroding purchasing power. The decline in China’s imports by 4.5% was smaller than the 8.0% consensus expectation, but still points to domestic economic problems. As our Teeuwe Mevissen summarizes, there are multiple reasons why China’s economy is struggling and most of them are factors that have been plaguing China’s economy for quite some time. On top of the ongoing weakness in the real estate sector and high levels of debt, regulatory uncertainty and geopolitical tensions are increasingly weighing on China’s weakening recovery.

Euro zone inflation expectations for the next 12 months fell to 4.1% in April from 5.0% in March, according to the ECB’s monthly survey, released yesterday. Expectations three years ahead declined to 2.5% from 2.9%. This could bolster the case of the doves in the Governing Council. However, ECB President Lagarde said on Monday that there is no clear evidence that underlying inflation has peaked and hawkish GC member Knot warned yesterday that the euro area is now observing second round effects from higher energy prices.

US voters think the debt limit deal reflects slightly more favorably on Democrats than on Republicans. According to a Reuters/Ipsos poll published yesterday, 50% of the respondents thought that neither party emerged as a winner and 20% decided that both sides won. However, 20% saw the Democrats as the winners, and only 11% thought the Republicans won. More good news for Biden is that 80% of Democrats liked his performance in the debt limit negotiations. In contrast, House Speaker McCarthy has a more difficult – because divided – audience as only 44% of Republicans approved of how he handled the debt limit. As we discussed in our Debt Limit Wrap Up, this may be the start of a more centrist course from President Biden, leading to more bipartisan legislation.

In fact, the House Republicans have shifted their focus to tax cuts. They are working on a bill to reverse limitations on the deductions companies can claim for interest, research costs and capital expenses from a 2017 law. Democrats may be willing to discuss these tax cuts, especially those related to R&D, but they are likely to demand a restoration of the expanded child tax credits that were in place during the pandemic year 2021 in exchange. The House Republicans could introduce their tax bill as soon as this month. Looking further ahead, Republicans have not indicated yet whether later this year they would go for an extension of the 2017 individual tax cuts that are set to expire at the end of 2025. Biden has already said he wants to extend these tax cuts only for people making less than 400K.

Day Ahead

Today, it is decision day for the Bank of Canada. Our expectation is for the Bank to keep the policy rate unchanged at 4.50%. As our Christian Lawrence summarizes, Canadian macroeconomic data released during May continued to paint a picture of slowing inflation, albeit at a very gradual pace, slowing activity, and low unemployment. We expect to see the labor market to start loosening, but this will likely be very gradual. We also expect the data will continue to support our view that rate cuts are unlikely in Canada over the course of the next year.

Chris Licht, the embattled CEO of CNN who took a wrecking ball to many of the network’s leftist anchors as part of an image rehabilitation, is out of a job after just 13 months, Puck News first reported.

His tenure at the network was marked with controversy, including the shuttering of the network’s failed CNN+ streaming platform at the request of CNN’s new owners who were unsure about a standalone digital product, a move which resulted in scores of layoffs. The network’s financial picture has also been worsening – generating just $750 million in profit last year, including one-time losses from CNN+, down from $1.25 billion the year before.

As Axios notes, “Licht’s leadership became untenable following a damning profile about him published by The Atlantic last week.”

Meanwhile, one day before the Atlantic story was published, longtime confidant of Warner Bros. Discovery CEO David Zaslav, David Leavy, was named Chief Operating Officer of CNN.

According to The Atlantic, the Town Hall with former President Donald Trump was the last straw;

When he took the helm of CNN, in May 2022, Licht had promised a reset with Republican voters—and with their leader. He had swaggered into the job, telling his employees that the network had lost its way under former President Jeff Zucker; that their hostile approach to Trump had alienated a broader viewership that craved sober, fact-driven coverage. These assertions thrust Licht into a two-front war: fighting to win back Republicans who had written off the network, while also fighting to win over his own journalists, many of whom believed their new boss was scapegoating them to appease his new boss, David Zaslav, who’d hired Licht with a decree to move CNN toward the ideological center.

One year into the job, Licht was losing both battles. Ratings, in decline since Trump left office, had dropped to new lows. Employee morale was even worse. A feeling of dread saturated the company. Licht had accepted the position with ambitions to rehabilitate the entire news industry, telling his peers that Trump had broken the mainstream media and that his goal was to do nothing less than “save journalism.” But Licht had lost the confidence of his own newsroom. Because of this, he had come to view the prime-time event with Trump as the moment that would vindicate his pursuit of Republican viewers while proving to his employees that he possessed a revolutionary vision for their network and the broader news media.

Trump had other ideas.

For 70 minutes in Manchester, the former president overpowered CNN’s moderator, Kaitlan Collins, with a continuous blast of distortion, hyperbole, and lies. The audience of Trump devotees delighted in his aggression toward Collins, cheering him on so loudly and so purposefully that what began as a journalistic forum devolved into a WWE match before the first voter asked a question.

In March, FTVLive suggested that Licht didn’t have long at the network – with one insider telling the outlet that he “doesn’t have his ear to the ground.” A spokesperson for the network refuted the report, saying that Licht and Saslav aren’t on the same page.

Guess that denial was fake news and it’s back to business as usual?

Authored by Ven Ram, Bloomberg cross-asset strategist,

If the labor market continues to stay robust, the Federal Reserve will be forced to tighten again after a pause in June to prevent its benchmark rate from falling behind the curve, an application of the Taylor Rule shows.

Given still-resistant core inflation, the restrictive rate for the US economy is between 5% and 6.55%, meaning the Fed’s mid rate at 5.125% isn’t yet getting the job done on curbing price pressures.

The chart above shows the Fed’s benchmark rate juxtaposed against a more generous application of the Taylor Rule and a less generous interpretation.

The more generous version is derived from using the Dallas Fed trimmed mean PCE and also assumes that the Fed’s real policy neutral rate is -50 basis points, which in the words of Fed St. Louis President James Bullard represents “an approximate pre-pandemic value” for the US economy. It also uses a phi value – which captures policymakers’ reaction to deviations of inflation from target – of 1.25.

The less generous version is bootstrapped from current inflation, a higher real neutral rate of +50 basis points that is more consistent with the macroeconomic momentum that we have seen in the aftermath of the pandemic, and a phi value of 1.5, which is closer to standard literature.

Core PCE inflation is now running at 4.7%, way above the Fed’s estimate that sees it crumbling to 3.6% this year before settling at 2% over the longer run.

Even though the Fed has raised rates by a phenomenal 500 basis points in the current cycle, core PCE has come off just 70 basis points from its peak of 5.4%.

While Chair Jerome Powell remarked recently that Fed’s “stance of policy is restrictive and we face uncertainty about the lagged effects of our tightening so far,” the stickiness of core inflation will force policymakers to raise rates further, though it doesn’t look likely that they will do so next week.

However, the findings of the analysis aren’t lost on the hawks of the Fed’s policy committee, who underscored in recent weeks that rates may have to climb higher to be restrictive. Back in March, when the economy was passing through the peak of the banking turmoil, seven of 18 members estimated that the Fed’s upper end of its funds rate needed to be at least 5.50% to be restrictive enough. With the stress in the banking sector now appearing to have settled, it is presumable that their numbers may grow, especially considering that core PCE is nowhere near the Fed’s comfort zone.

Interest-rate traders are yet to fully wake up to the possibility that the Fed will have to raise rates again. They are currently assigning only an 80% chance of one 25-basis point move in the cycle. As the analysis shows, the Fed may well have to hike by more than that.

And then there were 11 (Republican candidates for the presidential nomination)

1. Donald Trump

2. Ron DeSantis

3. Mike Pence

4. Chris Christie

5. Doug Burgum

6. Nikki Haley

7. Asa Hutchinson

8. Tim Scott

9. Larry Elder

10. Ryan Binkley

11. Perry Johnson

Former New Jersey Governor Chris Christie launched his 2024 presidential campaign in New Hampshire on Tuesday with a sharp-tongued assault on the frontrunner, calling Trump a “lonely, self-consumed, self-serving mirror hog.” 

Christie’s direct assault distinguishes him from other GOP contenders, who prefer alluding to Trump without mentioning him by name. Another sampling:   

“The person I am talking about…who is obsessed with the mirror, who never admits a mistake, who never admits a fault, who always finds someone else and something else to blame for whatever goes wrong — but finds every reason to take credit for anything that goes right — is Donald Trump.” 

Christie also lashed out at the larger Trump political-financial enterprise: “The grift from this family is breathtaking. It’s breathtaking. Jared Kushner and Ivanka Kushner walk out of the White House and months later get $2 billion from the Saudis?” That’s a reference to a $2 billion investment made by the Saudi sovereign wealth fund into a private equity fund launched by Kushner after he left government. 

Christie faulted Trump for having ““made us smaller by dividing us even further and pitting us one against the other.” He said President Biden was guilty of the same divisiveness, while also being “out of his depth” and “not the guy he used to be” — a thinly-veiled reference to the 80-year-old’s manifest mental decline. Trump is 76. 

Donald Trump is rattled by Chris Christie’s entering the race. Christie knows best how to prosecute the case against crooked Trump.

In response, Trump is body-shaming Christie. How pathetic coming from Trump. pic.twitter.com/y0O1hGUvTL

— Republicans against Trump (@RpsAgainstTrump) June 7, 2023

Sixty-year-old Christie joins other younger challengers for the GOP nomination: former South Carolina governor and Trump UN ambassador Nikki Haley is 51, current SC Senator Tim Scott is 57 and biopharma entrepreneur Vivek Ramaswamy is a barely-legal 37. The Democrats all skew older: Environmental lawyer Robert F. Kennedy, Jr is 69 and author Marianne Williamson is 70. Mike Pence, 64, is scheduled to announce his own candidacy in Iowa on Wednesday. 

What kind of policies would a President Christie give us? As a moderate Republican, it’s safe to assume he’d be a reliable servant of the military-industrial complex while giving lip service to fiscal responsibility as he compromises with Democrats to keep the federal government steaming relentlessly to fiscal disaster.  

After his failed 2016 presidential run, Christie was head of Trump’s transition team before he was demoted and replaced by Pence in the aftermath of New Jersey’s “Bridgegate” scandal. That affair featured politically motivated closures of the George Washington Bridge perpetrated by Christie allies to punish Fort Lee’s mayor for failing to endorse Christie. Prosecutors declined to pursue charges against Christie, but three of his cronies were found guilty.   

Many Trump foes long to see the pugnacious Christie take him on in GOP debates, the first of which is set for August 23rd in Milwaukee, which will also host the 2024 GOP convention. However, two things stand in the way of that scenario. First, Trump would have to agree to participate, and he’s already questioned the notion given his huge lead in the polls. 

Second, Christie would have to meet the GOP’s debate qualifications. That means garnering contributions from 40,000 donors and receiving 1% support in polls, with various ways to hit that target, to include hitting 1% in two of the early-primary states of Iowa, New Hampshire, Nevada and South Carolina. 

Christie is currently at 1% in the Real Clear Politics average, compared to 53.2% for Trump, 22.4% for DeSantis, 4.4% for Haley, 3.8% for Pence, 2.6% for Ramaswamy and 1.6% for Scott. 

A New York Times reporter noted that the audience for Christie’s launch announcement “appeared to be almost entirely independent voters. Registered Republicans were hard to find.” 

Authored by Jeff Louderbeck via The Epoch Times,

Three days after Robert F. Kennedy Jr. posted on Twitter that he was still banned from Instagram, the Meta-owned social media platform announced that it has restored his account.

“As he is now an active candidate for president of the United States, we have restored access to Robert F. Kennedy Jr.’s, Instagram account,” Andy Stone, a spokesperson for Instagram’s parent company Meta, said in a June 4 statement.

Kennedy, who is seeking the Democrat presidential nomination and is running against President Joe Biden and author Marianne Williamson, was barred from Instagram in February 2021 for what Meta described as breaking its rules regarding COVID-19.

At the time, a company spokesperson said Instagram removed his account for “repeatedly sharing debunked claims about the coronavirus or vaccines.”

Meta owns Facebook and Instagram. Kennedy’s Facebook account remained active.

Meta removed Instagram and Facebook accounts belonging to Children’s Health Defense (CHD), Kennedy’s non-profit organization that according to its website advocates to “end childhood health epidemics by working aggressively to eliminate harmful exposures, hold those responsible accountable, and establish safeguards to prevent future harm.”

Meta said that the CHD accounts were banned because they repeatedly violated the company’s COVID-19 policies.

Kennedy wrote on June 1 on Twitter, “Instagram still hasn’t reinstated my account, which was banned years ago with more than 900,000 followers.

“To silence a major political candidate is profoundly undemocratic. Social media is the modern equivalent of the town square. How can democracy function if only some candidates have access to it?” Kennedy added.

Outspoken Stances

Kennedy is the son of the late Sen. Robert F. Kennedy and the nephew of the late President John F. Kennedy and Sen. Ted Kennedy.

An environmental attorney, the younger Kennedy is widely known for his outspoken stances about the dangers of the COVID-19 vaccine and the negative impact of COVID pandemic lockdowns.

He is also a vocal opponent of government and Big Tech censorship.

On May 24, a Bloomberg columnist alleged that Twitter has “approved 83 percent of censorship requests by authoritarian governments.”

Musk responded by saying that his social media platform had no “actual choice” but to comply with government censorship requests.

Kennedy defended Musk with a tweet that said, “He is pretty much correct. Private companies can resist, but governments can shut down platforms like Twitter or fine them into oblivion.

“Enough,” Kennedy added. “I’m going to put a stop to that, at least in the United States.”

“The United States is supposed to be a champion of freedom in the world,” Kennedy wrote in another tweet. “My administration will restore that role. We will end the censorship-industrial complex.”

Musk Invitation

Musk invited Kennedy to appear in a live audio chat on Twitter Spaces for a conversation about “reclaiming democracy.”

The Democrat presidential candidate talked about censorship among other topics in the interview with Musk on June 5.

Kennedy praised Musk for his management of Twitter.

“I think if we don’t protect free speech at all costs, we don’t have a functioning democracy,” Kennedy said.

Former Twitter CEO Jack Dorsey on June 4 endorsed Kennedy for president in 2024.

Dorsey contends that Kennedy can defeat former President Donald Trump and Florida governor and Republican presidential candidate Ron DeSantis.

“He can and will,” Dorsey wrote.

Not a Fringe Candidate

Kennedy isn’t expected to get help from the Democratic National Committee, whose members voted at their winter meeting earlier this year to give Biden their full support.

During a town hall in suburban Philadelphia on June 5, Kennedy was asked by town hall host Michael Smerconish whether he thinks Biden owes the American people a debate with Democrat primary candidates.

“It’s a strategic decision for him,” Kennedy said about reports that Biden won’t participate in a debate. “I don’t even know if President [Donald] Trump will debate his opponents.”

Kennedy added that “the optics are not good” to Americans when candidates don’t debate because “there’s so many people now who believe the system is rigged against us.”

Mainstream media outlets, Kennedy believes, are limiting coverage of his campaign.

“They still treat me as a fringe candidate and they say ‘he doesn’t have a chance’ and they don’t even put me in the polls a lot of times. And I’m way ahead of [DeSantis]. My numbers are much better than his but he’s treated as a legitimate candidate,” Kennedy said at a Memorial Day speech in San Diego.

“That’s OK. They don’t have to treat me different,” he added. “All we have to do is win the election.”

Futs are starting flat for a second consecutive day, having reversed earlier losses, after China reported a bigger-than-expected drop in exports and OECD warned of a weak global economic recovery. Shares are trying to build on Tuesday’s gains as a rally in megacap stocks that had propelled the S&P 500 to the edge of a bull market continued to fizzle. As of 8:00 am ET, S&P futures were modestly in the green at 4295 while Nasdaq 100 futs were up 0.2%The Bloomberg Dollar Spot Index traded near the day’s lows, boosting most Group-of-10 currencies. Treasury yields were little changed amid listless trading global bond markets. Oil and gold were flat, while Bitcoin retreats a day after climbing more than 5%. Today’s macro data includes mtge applications, trade balance, and consumer credit. Ultimately, the macro data prints are light for the balance of the week.

In premarket trading, Apple was set to extend Tuesday’s decline, falling in premarket trade along with Nvidia and Microsoft in a signal that more air is coming out of the rally in tech shares. Tech stocks continued to decline amid growing expectations that central banks will keep rates higher for longer (at least until the next big macro print), disappointing hopes they will pivot to rate cuts later this year. Here are some other notable premarket movers:

• Amazon.com was upgraded to outperform from neutral at Edgewater Research, which sees a more positive outlook for the e-commerce and cloud-computing company. Shares are up as much as 0.7%.
• Coinbase rises 2.2% after the crypto firm slumped 12% on Tuesday following the Securities and Exchange Commission’s lawsuit against the firm.
• Dave & Buster’s rises 5.1% after the food and entertainment venue operator reported first-quarter earnings per share that beat estimates.
• Herbalife slips 0.6% as Mizuho Securities initiates coverage with a neutral recommendation, saying the long-term targets of the nutrition company are achievable, but near-term visibility is limited.
• Novocure Ltd. climbs as much as 5.1% as Wedbush analyst David Nierengarten raised his recommendation on the stock to neutral from underperform.
• Petroleo Brasileiro SA’s US-traded shares are up 2.1% after Morgan Stanley upgraded the company to overweight from equal weight and raised the price target to $16.50 from $12.50, citing “further room for capital appreciation.”
• Stitch Fix rises 7.3% as analysts note that the online clothing company’s better-than-expected revenue and cost-cutting measures could pave the way for better profitability.
• Yext Inc. rallies 18% after the infrastructure-software company boosted its adjusted earnings per share guidance for the full year.

“One of the things I’m a little nervous about is that the rates market got a little too carried away about the central banks being able to quickly pre-emptively cut rates,” said Karen Ward, chief market strategist for EMEA at JPMorgan Asset Management, in an interview with Bloomberg TV. With rates markets pricing out some expected cuts, “that to me puts some of those growth, those megacap tech valuations, a little at risk,” she said.

European shares wavered, with sentiment damped by a bigger-than-expected drop in Chinese exports and an OECD warning that the global economy is set for a weak recovery, dogged by persistent inflation and restrictive central bank policies. Specifically, the OECD said a global recovery that will be weaker than expected, +2.7% for FY23 and +2.9% for FY24 vs. +3.4% average over the 7 years preceding COVID; this comes amid elevated global inflation

Euro Stoxx 50 falls 0.5%. FTSE MIB lags regionals, dropping 0.9%. Autos, insurance and chemicals are the worst-performing sectors. The FTSE 100 fluctuated after UK lender Halifax said the nation’s house prices posted their first annual decline since 2012. Hermes International was among the biggest drags on the benchmark, and was set to decline for the third straight session on Wednesday. Despite some hopes over potential stimulus, conviction on the China reopening trade has faltered, with sectors such as luxury goods among the hardest-hit. Here are some notable European movers:

• Inditex shares rise as much as 6.2% to the highest since 2017 after the Zara owner reported a 1Q earnings beat and a strong start to 2Q. Analysts see potential consensus increases after the results.
• Danske Bank gains as much as 5.9%, the most since October, after the Danish lender raised its key profitability target and said it will offer more than DKK50 billion in dividends by 2026.
• Hugo Boss rises as much as 4.1% after UBS initiated coverage with buy and a Street-high price target, noting the firm’s turnaround story.
• SBB climbs as much as 14%, extending the gains triggered after Friday’s surprise announcement that the beleaguered Swedish landlord would change its CEO.
• DiscoverIE rises as much as 4.9% after the electronic components distributor reported results which analysts say demonstrate the strength of its business model, noting the firm’s positive outlook.
• Assa Abloy gains as much as 4.9% after the Swedish lock and entrance systems manufacturer announced Mexican authorities gave a green light to its acquisition of hardware unit HHI.
• 888 Holdings rises as much as 22%, extending Tuesday’s gains, after a group of gambling-industry veterans built a stake in the owner of British betting chain William Hill.
• Sectra drops as much as 10% after the Swedish medical imaging company was downgraded to sell at Carnegie, with the broker saying that the stock’s valuation has again become too high.
• BE Semiconductor falls as much as 6.4%, extending a decline that started during Tuesday’s capital markets day, with analysts flagging a delay to a key product to 2027 from earlier 2025.
• PGE drops as much as 3.4% after a court in Warsaw suspended the execution of the environmental decision for the company’s Turow open-pit lignite mine, allowing it to operate until 2044.
• KBC dips as much as 0.7% after AlphaValue/Baader downgraded the Belgian bank to reduce as it expects margins to decline in 2024 due to rate cuts and lower loan volumes than anticipated.

“Weaker global trade is not a new story but it is surprising how quickly China’s reopening boost has faded,” said Craig Erlam, a senior market analyst at Oanda. “Pressure is set to intensify on the leadership to announce new stimulus measures in a bid to revitalize the economy again.”

Earlier in the session, Asian shares were mostly stronger following the positive handover from Wall St where the S&P 500 posted its highest close YTD and the Russell 2000 rallied amid strength in regional banks, although advances were capped as the attention in Asia turned to softer-than-expected Chinese trade data.

• Hang Seng and Shanghai Comp. were positive after reports that China asked the largest banks to cut deposit rates to boost the economy and with Hong Kong led by tech strength, while price action was less decisive in the mainland after the latest Chinese trade data mostly disappointed including the wider-than-expected contraction in dollar-denominated exports.
• Nikkei 225 wiped out its initial gains in an early 700-point swing and briefly dipped beneath the 32,000 level where it found some support.
• ASX 200 was just about kept afloat but with the upside limited by the weaker-than-expected Australian GDP and hawkish adjustments to peak rate forecasts.
• Indian stocks rallied for fourth consecutive day to hover around all-time high levels ahead of interest rate-setting panel’s decision on Thursday. The S&P BSE Sensex rose 0.6% to 63,142.96 in Mumbai, while the NSE Nifty 50 Index advanced 0.7% and both gauges closed a little short of their peak levels seen in December. Reliance Industries contributed the most to the Sensex’s gain, increasing 0.7%. Out of 30 shares in the Sensex index, 20 rose and 6 fell, while 4 were unchanged

In FX, the Bloomberg dollar spot index gives up earlier gains. NZD and DKK are the weakest performers in G-10 FX, NOK and AUD outperform.  the Turkey lira plunged to a record low, and is the worst-performing currency against the dollar versus expanded majors, as traders said state lenders had halted dollar sales to defend it.

In rates, treasuries are slightly cheaper across the curve with losses led by front-end and belly, flattening 2s10s, 5s30s spreads on the day. Stock futures remain inside Tuesday session range, while WTI crude oil futures advance over 1%. US session quiet for scheduled events, with minimal data, supply (except 17-week bills) and no Fed speakers expected.  Yields cheaper by up to 3bp across front-end of the curve with 2s10s, 5s30s spreads flatter by 0.8bp and 2bp on the day; 10- year yields around 3.685%, cheaper by 2.5bp vs. Tuesday close with bunds and gilts outperforming by 1.5bp and 3bp in the sector

In commodities, WTI traded about 1% higher around $72.50 while ags appear to have caught a bid from the escalation of hostilities in Ukraine. Spot gold is little changed at $1,962/oz.

Looking at today’s calendar, at 7 a.m., we got the latest mortgage applications data (another drop, this time -1.4%), followed by April trade figures at 8:30 a.m and a consumer credit report at 3 p.m. The Bank of Canada will deliver a rate decision at 10 a.m. New York time. President Joe Biden will meet with his UK Prime Minister Rishi Sunak in Washington.

Market Snapshot

• S&P 500 futures down 0.1% to 4,284.00
• MXAP little changed at 163.82
• MXAPJ up 0.5% to 517.07
• Nikkei down 1.8% to 31,913.74
• Topix down 1.3% to 2,206.30
• Hang Seng Index up 0.8% to 19,252.00
• Shanghai Composite little changed at 3,197.76
• Sensex up 0.3% to 63,005.26
• Australia S&P/ASX 200 down 0.2% to 7,117.99
• Kospi little changed at 2,615.60
• STOXX Europe 600 down 0.2% to 460.81
• German 10Y yield little changed at 2.38%
• Euro little changed at $1.0686
• Brent Futures little changed at $76.30/bbl
• Gold spot down 0.2% to $1,959.65
• U.S. Dollar Index little changed at 104.16

Top Overnight News

• China’s May exports come in below plan, dropping 7.5% Y/Y in May (vs. the Street’s -1.8% forecast and much weaker than the +8.5% in April), although imports were a bit better (-4.5% vs. the Street’s -8%). China posts health commodity imports in May despite softer exports, with crude imports the third-highest monthly level on record. RTRS
• US secretary of state Antony Blinken will travel to China this month, in the latest sign that Beijing and Washington are beginning to stabilize a turbulent bilateral relationship that had sunk to the lowest point in decades. FT
• India expected to begin manufacturing GE jet-fighter engines in the country under a deal expected to be struck with Washington, part of New Delhi’s pivot away from Russian military equipment. WSJ
• The Turkish lira plunged the most in more than a year as state lenders halted dollar sales to defend it, a sign the new economic administration is giving up on costly interventions. The currency fell as much as 7.2% per dollar, weakening for a 12th day. BBG
• New York pushed past Hong Kong as the world’s most expensive city to live in as an expat, thanks to inflation and rising accommodation costs, while skyrocketing rents saw Singapore crash into the top five for the first time. Geneva and London remained in third and fourth places, according to the ECA International’s Cost of Living Rankings for 2023. BBG
• Michael Dell’s family office plans to diversify its portfolio to absorb a payday of cash and stock worth more than $20 billion after Broadcom acquires VMware. BBG
• Mike Pence kicks off his presidential campaign in Iowa, with the former VP saying “different times call for different leadership.” Pence is offering himself as the only traditional conservative who can win the nomination, defeat Biden and govern with more civility than Donald Trump. “Our party and our country need a leader that’ll appeal, as Lincoln said, to the better angels of our nature,” he said. BBG   
• Wells Fargo will sell an office building in San Francisco for $42.6-46MM, a steep discount to the $108MM paid for the property back in 2005. Real Deal
• Reddit is cutting about 90 people, or 5% of its staff, and plans to slow hiring going forward, becoming the latest tech firm to reduce headcount. WSJ
• AI: Equity investors are vigorously debating the influence generative artificial intelligence (AI) may have on the future revenue growth and profitability of companies, and the valuation of stocks. We believe further upside exists to the S&P 500 index level if investors price some potential productivity and profit boost from AI adoption. Based on a range of productivity scenarios, we estimate the benefit to S&P 500 fair value could be as small as +5% vs. current levels and as large as +14%. Read Ryan Hammond and team’s full report here.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks mostly gained following the positive handover from Wall St where the S&P 500 posted its highest close YTD and the Russell 2000 rallied amid strength in regional banks, although advances were capped as the attention in Asia turned to softer-than-expected Chinese trade data. ASX 200 was just about kept afloat but with the upside limited by the weaker-than-expected Australian GDP and hawkish adjustments to peak rate forecasts. Nikkei 225 wiped out its initial gains in an early 700-point swing and briefly dipped beneath the 32,000 level where it found some support. Hang Seng and Shanghai Comp. were positive after reports that China asked the largest banks to cut deposit rates to boost the economy and with Hong Kong led by tech strength, while price action was less decisive in the mainland after the latest Chinese trade data mostly disappointed including the wider-than-expected contraction in dollar-denominated exports.

Top Asian News

• China Stocks Woes Hamper Hong Kong IPO Recovery: ECM Watch
• Blinken Plans Trip to Beijing in Bid to Stabilize US-China Ties
• China Traders Are Leveraging Up The Most on Record on Flush Cash
• Pakistan Bonds, Stocks Rise on Growing Optimism for IMF Loan
• China’s Steel Slowdown Pushes Exports to Highest Since 2016
• Air India Sends Relief Jet to Russia for Stranded Passengers

European bourses are softer, Euro Stoxx 50 -0.3%, with the complex drifting after the cash open amid a relative lack of fresh catalysts/drivers. Though, attention remains on the soft Chinese trade figures and German industrial output, on the latter ING writes that unless there is a significant pickup Germany could continue into a Q2 recession. Sectors are similarly softer though Retail names outperform amid strength in Inditex post earnings while Danske Bank is the Stoxx 600 outperformer after providing FY26 targets and a dividend update. Stateside, futures are slightly softer in-fitting with the above in similarly limited trade with the region entirely focused on next week’s CPI/FOMC; though, today’s BoC might provide an interim focal point, ES -0.1%. US lawmakers are reportedly attempting to curb Mastercard (MA) and Visa (V) fees, via WSJ.

Top European news

• ECB’s Schnabel says, on rates, “We have more ground to cover. It will depend on the incoming data by how much more rates will have to increase.”. When questioned on market expectations for two 25bp hikes: “A peak in underlying inflation would not be sufficient to declare victory: we need to see convincing evidence that inflation returns to our 2% target in a sustained and timely manner. We are not at that point yet.”
• ECB’s de Guindos says “To complete the crisis management toolkit for large banks in the EU, we also need to make progress in other areas, such as liquidity in resolution and a backstop to the Single Resolution Fund.”.
• ECB’s Knot says prolonged monetary tightening could still result in stress for financial markets, inflation expectations in financial markets seem optimistic, not convinced that current tightening is sufficient.
• UK PM Sunak seeks to forge an economic alliance with US President Biden and aims to extract concessions from the US on green technologies, according to FT.

FX

• DXY drifts on the 104.000 handle in the absence of primary US data and Fed commentary during pre-FOMC purdah.
• Yen relishes softer Treasury yields as USD/JPY retreats further from recent peaks towards 139.00 and decent option expiries.
• Yuan continues to wilt as weak Chinese trade/export metrics compound growth concerns, USD/CNY and USD/CNH top 7.1300 and 7.1400 respectively.
• Aussie underpinned near 0.6700 vs Greenback as RBA officials underline hawkish guidance, but AUD/USD is capped by tech resistance and hefty expiry interest.
• Loonie perky pre-BoC around 1.3400 handle against Buck as market pricing sits tight between pause and 25 bp hike.
• TRY depreciation is a strong signal of a move away from state controls in favour of a free market and declines in the CBRT’s reserves have stopped after signs of FX policy change, according to traders cited by Reuters.
• PBoC set USD/CNY mid-point at 7.1196 vs exp. 7.1194 (prev. 7.1075)

Fixed Income

• Bonds regroup after reversal from highs through or towards prior closing levels.
• Bunds, Gilts and T-notes back above parity within 134.67-07, 96.87-51 and 114-02+/113-26 respective ranges awaiting US and Canadian trade data pre-BoC.
• Demand for German Green Bobl exceptionally strong (record high), while 2025 UK Gilt sale reasonably well covered.
• Orders for the new 4yr BTP Valore retail bond reach EUR 11bln since the beginning of the offer period.

Commodities

• Crude benchmarks are firmer and back towards post-inventory levels as the USD dips and despite overnight trade data.
• Currently, WTI Jul’23 and Brent Aug’23 post upside of around USD 0.50/bbl; newsflow has been limited and focused on geopols and while IEA’s Birol spoke he added little aside from looking for a tight H2.
• US Energy Inventory Data (bbls): Crude -1.7mln (exp. +1.0mln), Gasoline +2.4mln (exp. +0.9mln), Distillate +4.5mln (exp. +1.3mln), Cushing +1.5mln.
• Base metals are modestly firmer and largely shrugged off Chinese trade as the import metrics seemingly indicate the overall reopening-recovery narrative remains in play.
• Spot gold is little changed as the USD pulls back to near-U/C with the yellow metal holding above the USD 1956/oz 10-DMA but unable to make much headway from session high circa. USD 10/oz above.
• Discussions on the Black Sea grain deal to occur in Geneva on Friday, via Ria citing sources.
• Indian Steel Minster says they are looking aggressively to diversify coking coal imports, requirement for this product is going to increase.

Crypto

• Binance commented on the US SEC filing a motion to freeze assets in which it stated that user assets remain safe and its platform continues normal deposit and withdrawal operations, while it added that the filing of the preliminary injunction is unwarranted and it looks forward to defending against it in court, according to Reuters.
• Coinbase (COIN) says the incident with delayed ETH transactions has been resolved.

Geopolitics

• US Secretary of State Blinken and Saudi Crown Prince MBS had an open and candid discussion covering a full range of bilateral issues, while there was a good degree of convergence in the meeting but also differences. Furthermore, they discussed the potential for normalisation of relations between Saudi Arabia and Israel, as well as agreed to continue dialogue on normalisation, while Blinken raised human rights issues with MBS both generally and related to specific cases, according to a US official.
• US Secretary of State Blinken is set to travel to China for talks in the coming weeks in a visit intended to be a major step in thawing relations between the two countries, according to Reuters citing a US official.
• EU nations are approaching a deal on the 11th sanctions package against Russia. Representatives in Brussels are aiming to get the package over the line at their meeting today. EU diplomats suggest that several questions are still open, according to Politico.
• Number of IAEA inspectors at the Zaporizhzhia nuclear plant to increase several times, via Tass citing Russia’s Rosenergoatom.

US Event calendar

• 07:00: June MBA Mortgage Applications, prior -3.7%
• 08:30: Revisions: US Trade in Goods and Services
• 08:30: April Trade Balance, est. -$75.8b, prior -$64.2b
• 15:00: April Consumer Credit, est. $22b, prior $26.5b

DB’s Jim Reid concludes the overnight wrap

Today is the day where I see whether I need to start the training clock for the 2036 Olympics as my daughter Maisie has her first ever swimming gala. It’s only against a couple of schools so if she wins her race the dream is still on and if she doesn’t I’ll conclude that unless we have all the global medalists for 2036 in the same 5 mile catchment area in Surrey then it’s probably not going to happen. Last week she swam 6 times!! If anyone can explain how you can have any kind of life with a full time job and 3 kids with various sporting commitments and parties then I’d love to know. I didn’t see my wife in the evenings last week or last weekend with all the ferrying. All answers gratefully received.

Markets are generally swimming slightly against the tide this week, with the S&P 500 (+0.22%) still not quite able to break out into bull market territory that it crossed intra-day on Monday. Having said that the index did just about close at a high for 2023 so the momentum is still there to some degree. In a week of limited data and a Fed blackout there have been a few stories swirling around in the background that have dampened sentiment without reversing it. That has included geopolitical risks, weak data releases, as well as growing scepticism that the Fed would end up cutting rates this year. In fact, by the close yesterday, the 2s10s curve had inverted to a post-SVB low of -82.3bps, which just demonstrates how various recessionary indicators are still flashing with growing alarm.

The newsflow was pretty subdued from the outset yesterday, and shortly after we went to press German factory orders unexpectedly contracted by -0.4% in April (vs. +2.8% expected). This echoed the signals in the latest manufacturing PMI for May, which hit a 3-year low of 43.2, as well as the data revisions a couple of weeks ago that Germany did experience a winter recession after all.

That weak data interacted with further geopolitical concerns, particularly after the Kakhovka dam in Ukraine was destroyed, which has led to serious flooding in southern Ukraine. A key concern is with regard to the Zaporizhzhia nuclear plant, which relies on water supplies to cool its reactors, but experts didn’t consider a nuclear incident likely. From a market perspective, the bigger concern could well be the impact on agricultural prices and hence inflation, with wheat prices (+0.52%) recording a 5th consecutive daily increase, although having pared back earlier gains when it had been up as much as +3.85%. As it happens, we flagged in our World Outlook on Monday (link here) that a widely-predicted El Nino event this year was a risk to the trend of declining food prices over recent months, so events like that and the Ukraine flooding could provide an additional inflationary impulse as growth slows. You could add in bubbling concerns about low water levels at the lake that feeds the Panama Canal to that list of supply side concerns. The Panama Canal Authority is predicting a record low water level for the end of July with weight limits and rising surcharges already in force. So one to watch in the weeks ahead.

On the theme of geopolitics/supply chains, this morning Marion Laboure and Cassidy Ainsworth-Grace on my team have published an update on the landscape for semiconductors and rare earth metals (link here). It’s a topical story, since yesterday saw Japan announce a revised chips strategy that has the goal of tripling sales of Japanese-produced semiconductors by 2030. And that follows China’s announcement in late-May that Micron’s products had failed its cybersecurity review, saying that it posed “relatively serious” cybersecurity risks. It also comes amidst a growing push towards more resilient supply chains, which was one of the themes at last month’s summit of G7 leaders.

Back to markets and risk assets were fairly steady on the whole, and the S&P 500 (+0.22%) posted only a very modest gain. Banks (+1.84%) were the main outperformer in the index, whilst the megacap tech stocks continued to strengthen, with the FANG+ Index (+0.56%) taking its YTD gains up to +67.53% by the close. With equities grinding higher, equity volatility hit a new local low as the VIX index closed under 14.0pts (13.96) for the first time since February 2020. Small cap stocks strongly outperformed with the Russell 2000 index +2.73% higher, which was its second best day since November with the only better day being last Friday. European equities also recovered from their Monday losses, with the STOXX 600 up +0.38%.

When it came to sovereign bonds, there was a mixed performance on either side of the Atlantic. US Treasuries were flat, with the 10yr yield unchanged at 3.683%. That comes with just a week to go until the Fed’s next decision, where markets are still pricing in a temporary pause as the most likely outcome, which would be a big milestone after a run of 10 consecutive rate hikes. But it was a different story in Europe, where yields on 10yr bunds (-3.0bps) and OATs (-0.6bps) both moved lower. In part, they were supported by the ECB’s latest Consumer Expectations Survey for April, which showed that median 1yr inflation expectations were down to 4.1%, which is their lowest since February 2022 when Russia’s invasion of Ukraine began.

Asian equity markets are mixed this morning after erasing their opening gains after China’s May trade data disappointed (more on this below). As I check my screens, the rally in Japanese stocks has paused for breath after recently hitting 30yr plus highs with the Nikkei sliding -1.44% and leading losses across the region. Mainland Chinese markets are also struggling with the CSI (-0.34%) trading in the red and the Shanghai Composite (+0.02%) surrendering its opening gains. Elsewhere, the Hang Seng (+0.94%) is moving higher with the KOSPI (+0.32%) also seeing a positive start after coming back from a public holiday. In overnight trading, US stock futures tied to the S&P 500 (+0.01%) are flat.

Coming back China, the data showed that exports (-7.5% y/y) fell in May for the first time since February, much faster than the market expected drop of -1.8%, after a gain of +8.5% in the preceding month. Meanwhile, imports declined at a slower pace, dropping -4.5% y/y in May (v/s -8.0% expected; -7.9% in April). The call for fresh stimulus is mounting.

Elsewhere in Australia, Q1 GDP expanded +2.3% y/y, slightly below market expected growth of +2.4% and against a downwardly revised expansion of +2.6% in the final quarter of 2022. On a q-o-q basis, GDP grew by just +0.2% in the March quarter, the smallest increase since the nation emerged from the Covid lockdown in September 2021 and compared with a rise of +0.3% expected before today’s announcement.

Staying with growth, the World Bank released their latest global outlook yesterday, which pointed to growth of +2.1% in 2023, up by four-tenths relative to their January forecast. However, they revised down their 2024 forecast by three-tenths to 2.4%. Looking out to 2025, they then see growth accelerating back up to +3.0%. Otherwise, Euro Area retail sales were unchanged in April (vs. +0.2% expected), although the previous month’s contraction was revised up to show a smaller -0.4% decline.

To the day ahead now, and data releases include German industrial production and Italian retail sales for April, along with the US trade balance for April. Otherwise, the Bank of Canada will be making its latest policy decision, and we’ll hear from ECB Vice President de Guindos, and the ECB’s Knot, Panetta and Vujcic. Lastly, the OECD will be releasing its latest Economic Outlook, and UK PM Sunak will be visiting US President Biden in Washington.