Month: April 2024

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

Results from early testing show that pasteurization killed highly pathogenic avian influenza in milk, the U.S. Food and Drug Administration (FDA) says.

Results from “an initial limited set of geographically targeted samples” show that “pasteurization is effective in inactivating” the influenza, commonly known as the bird flu, the FDA said in an April 26 update.

The FDA gathered samples from grocery stores with confirmed cases of the flu in cattle. The agency has said that one in five tested positive for avian influenza, but stressed that polymerase chain reaction (PCR) testing can return positive due to residual fragments.

“This additional testing did not detect any live, infectious virus. These results reaffirm our assessment that the commercial milk supply is safe,” the regulatory agency stated.

Testing of samples of powdered infant formula sold at stores also returned negative.

Many infectious disease experts and government officials have said they believe the pasteurization process will inactivate the virus, also known as avian influenza.

“I’m not worried about the milk itself,” said Samuel Alcaine, an associate professor of food science at Cornell University. “It does indicate that the virus is more widespread among dairies than we had previously thought.”

The FDA, which has refused to say how many milk samples tested positive, the sources of the samples that tested positive, and what other products were tested outside milk and formula, is in the process of conducting additional testing. That testing could find milk with live virus intact, agency officials acknowledged.

“The FDA is further assessing retail samples from its study of 297 samples of retail dairy products from 38 states,” it said. “All samples with a PCR positive result are going through egg inoculation tests, a gold-standard for determining if infectious virus is present. These important efforts are ongoing, and we are committed to sharing additional testing results as soon as possible. Subsequent results will help us to further review our assessment that pasteurization is effective against this virus and the commercial milk supply is safe.”

The bird flu has traditionally spread in birds. Cases of H5N1 in cattle began being confirmed in the United States earlier this year. The virus has since been detected in herds in nine states. A herd in Colorado tested positive on April 25, the U.S. Department of Agriculture said.

One person in Texas has had a confirmed case this year and survived the infection.

Worldwide, 28 cases of H5N1 have been reported to the World Health Organization since the beginning of 2021, including the recent case in Texas and a case in the United States in 2022. Some of the patients survived, while others died.

Authorities say that cow-to-cow transmission has occurred. Major questions that remain unanswered include the method of that transmission and whether cows have spread the virus back to birds.

The White House has said that it is monitoring the avian flu situation, launching an “immediate response team” to ensure the safety of the nation’s food supply, monitor trends to mitigate risk and prevent the virus’ spread.

Starting on Monday, the U.S. Department of Agriculture will require dairy cows to test negative for bird flu before they are moved across state lines.

In addition to Colorado, infections among cattle have been confirmed in Texas, Kansas, Michigan, Ohio, Idaho, New Mexico, North Carolina, and South Dakota.

In Indiana, officials are considering potential restrictions, such as testing within the state, even though there are no confirmed cases, according to Bret Marsh, the state veterinarian.

“We’re taking a look here at the state level to see what we may need to do,” he said on a conference call.

Reuters contributed to this report.

As DB’s Jim Reid notes, with just two days left in a rollercoaster April for markets – and FX – last week actually saw the best week for the S&P 500 (+2.67%) and NASDAQ (+4.23%) since November, following several weeks of declines, as earnings gave markets a boost even if the US inflation data was on net worrying. And while the month is almost over, the new week is just starting and as Reid notes, it’s shaping up an exceptionally busy week of important events.

The FOMC on Wednesday is the obvious highlight of the week, but we also have payrolls on Friday to look forward to. DB expect a more hawkish-leaning Fed this week. While our economists expect the Committee will maintain an easing bias, they do expect the statement and press conference to echo Chair Powell’s view that firmer inflation prints suggest it will take longer to gain confidence about disinflation. The press conference will be fascinating to see the nuances in Powell’s responses as he justifies a likely unchanged easing bias, even if the rhetoric is more hawkish, in the face of rising inflation.

In terms of the jobs report on Friday, our US economists see payrolls gaining +240k in April (consensus +250k), down from +303k in March. The consensus expects the unemployment rate and the hourly earnings growth rate to stay at 3.8% and +0.3% MoM, respectively, although DB expects the former to tick up a tenth. Overall the market sees a solid report.

Other key data in the US includes consumer confidence tomorrow, the manufacturing ISM, JOLTS, and ADP on Wednesday, and the services ISM on Friday. We also see the latest US Treasury quarterly refunding announcement on Wednesday, after the borrowing estimate is due today. This was a big pivot point for global markets back in August (negative) and October (positive) but since then a commitment not to increase auction sizes has reduced its importance.

Finally in the US, earnings season maintains its peak pace as 174 report in the S&P versus 180 last week with Amazon (Tuesday) and Apple (Thursday) the obvious highlights. Meanwhile, 66 Stoxx 600 companies will report this week.

In Europe, preliminary CPI reports for Germany and Spain today, and the Eurozone tomorrow will have a lot of significance for the June ECB meeting and whether we will see the first cut. Our European economists preview the release here. For the Eurozone, they expect the headline HICP to fall one-tenth to 2.31% yoy, its lowest value since August 2021 and see core inflation slowing further to 2.45% yoy, 0.50pp lower than in March 2024. Staying in Europe the latest GDP data for Germany, France, Italy and the Eurozone are due tomorrow. In Asia, various China PMIs (tomorrow) will be a big focus and in Japan, several key economic indicators are also due, including industrial production and labour market data tomorrow.

Day-by-day calendar of events:

Monday April 29

• Data : US April Dallas Fed manufacturing activity, Germany April CPI, Eurozone April services, industrial and economic confidence
• Earnings : PetroChina, China Construction Bank, BYD, NXP Semiconductors, Domino’s Pizza, Paramount Global
• Auctions : US Treasury borrowing estimates

Tuesday April 30

• Data : US Q1 employment cost index, February FHFA house price index, April MNI Chicago PMI, Dallas Fed services activity, Conference Board consumer confidence, UK March net consumer credit, mortgage approvals, M4, April Lloyds business barometer, China April official PMIs, Caixin manufacturing PMI, Japan March retail sales, job-to-applicant ratio, jobless rate, industrial production, housing starts, Italy Q1 GDP, March hourly wages, April CPI, Germany Q1 GDP, April unemployment claims rate, France Q1 GDP, March PPI, consumer spending, April CPI, Eurozone Q1 GDP, April CPI, Canada February GDP, New Zealand Q1 jobs report , Denmark March unemployment rate
• Central banks : BoE’s APF report
• Earnings : Amazon, Eli Lilly & Co, Samsung, Coca-Cola, AMD, McDonald’s, Stryker, Starbucks, Mondelez, Mercedes-Benz Group, Volkswagen, PayPal, adidas, Diamondback Energy, Restaurant Brands, Pinterest, Vonovia, Covestro, Caesars Entertainment

Wednesday May 1

• Data : US March JOLTS report, construction spending, April total vehicle sales, ISM index, ADP report, Canada April manufacturing PMI
• Central banks : Fed’s decision
• Earnings : Mastercard, Qualcomm, Pfizer, KKR, GSK, Marriott, Estee Lauder, DoorDash, Corteva, Haleon, Devon Energy, Barrick Gold, eBay, Albemarle, Etsy
• Auctions : US quarterly refunding announcement

Thursday May 2

• Data : US Q1 unit labor costs, nonfarm productivity, March trade balance, factory orders, initial jobless claims, Japan April monetary base, consumer confidence index, Italy March PPI, April manufacturing PMI, new car registrations, budget balance, Canada March international merchandise trade, Switzerland April CPI
• Central banks : BoJ minutes of the March meeting
• Earnings : Apple, Novo Nordisk, Shell, Linde, ConocoPhillips, Booking, Cigna, Regeneron, Apollo, Pioneer, Universal Music Group, Block, Ares, Moderna, Blue Owl, Vestas, AP Moller – Maersk, Orsted, ArcelorMittal, Live Nation Entertainment, DraftKings
• Other : UK local elections, OECD economic outlook

Friday May 3

• Data : US April jobs report, ISM services, UK April official reserves changes, Italy March unemployment rate, France March industrial production, budget balance, Eurozone March unemployment rate, Canada April services PMI, Norway April unemployment rate
• Earnings : Hershey, Daimler Truck, Cheniere Energy

* * *

Looking at just the US, Goldman writes that the key economic data releases this week are the Employment Cost Index on Tuesday, ISM manufacturing and JOLTS job openings on Wednesday, and the employment report on Friday. The May FOMC meeting is on Wednesday. The post-meeting statement will be released at 2:00 PM ET, followed by Chair Powell’s press conference at 2:30 PM. Treasury will release its Q2 financing estimates on Monday and the Quarterly Refunding Statement on Wednesday.

Monday, April 29

• 10:30 AM Dallas Fed manufacturing activity, April (consensus -11.3, last -14.4)

Tuesday, April 30

• 08:30 AM Employment cost index, Q1 (GS +0.9%, consensus +1.0%, last +0.9%): We estimate the employment cost index rose by 0.9% in Q1 (qoq sa), which would lower the year-on-year rate by two tenths to 4.0% (nsa yoy). Our forecast reflects deceleration in the Atlanta Fed wage tracker and in average hourly earnings of production and nonsupervisory workers. We also expect a slower pace of ECI growth among unionized workers, following the 1.7% spike in Q4 (SA by GS, not annualized). On the positive side, we assume ECI benefit growth picks back up to 0.9% (vs. 0.7% in Q4), reflecting expanded benefit offerings at the start of the year.
• 09:00 AM FHFA house price index, February (consensus +0.1%, last -0.1%)
• 09:00 AM S&P Case-Shiller 20-city home price index, February (GS +0.07%, consensus +0.10%, last +0.14%)
• 09:45 AM Chicago PMI, April (GS 46.4, consensus 45.0, last 41.4): We estimate that the Chicago PMI rose by 5pt to 46.4 in April, reflecting the rebound in global manufacturing activity.
• 10:00 AM Conference Board consumer confidence, April (GS 104.3, consensus 104.0, last 104.7

Wednesday, May 1

• 08:15 AM ADP employment change, April (GS +185k, consensus +180k, last +184k): We estimate a 185k rise in ADP payroll employment in April, reflecting a solid underlying pace of job growth and a possible boost from residual seasonality: the ADP measure has picked up in April relative to Q1 in four of the last six years excluding 2020.
• 09:45 AM S&P Global US manufacturing PMI, April final (consensus 49.9, last 49.9)
• 10:00 AM Construction spending, March (GS +0.8%, consensus +0.3%, last -0.3%)
• 10:00 AM JOLTS job openings, March (GS 8,650k, consensus 8,680k, last 8,756k): We estimate that JOLTS job openings fell by 0.1mn to 8.65mn in March, reflecting the pullback in online job postings.
• 10:00 AM ISM manufacturing index, April (GS 50.8, consensus 50.1, last 50.3): We estimate the ISM manufacturing index rose by 0.5pt to 50.8 in April, reflecting the rebound in global manufacturing activity. Our manufacturing tracker rose 1.5pt to 49.9.
• 02:00 PM FOMC statement, April 30-May 1 meeting: As discussed in our FOMC preview, the upside inflation surprise over the last three months has delayed the first cut and narrowed the path for the FOMC to cut at all this year. We have not changed our big picture inflation view because the surprises look idiosyncratic, the categories that are still hot reflect lagged catch-up rather than current cost pressures, and the key pillars of the disinflation narrative remain intact. We expect the next few inflation reports to be softer and have therefore stuck with our forecast of cuts in July and November, but even moderate upside surprises could delay cuts further.
• 05:00 PM Lightweight motor vehicle sales, April (GS 15.8mn, consensus 15.7mn, last 15.5mn)

Thursday, May 2

• 08:30 AM Trade balance, March (GS -$69.0bn, consensus -$69.2bn, last -$68.9bn)
• 08:30 AM Nonfarm productivity, Q1 preliminary (GS +0.8%, consensus +0.8%, last +3.2%); Unit labor costs, Q1 preliminary (GS +3.5%, consensus +3.3%, last +0.4%): We expect nonfarm productivity growth of +0.8% (qoq saar) in the Q1 preliminary reading. We expect unit labor costs—compensation per hour divided by output per hour—to grow 3.5% in the Q1 preliminary reading, which would increase the year-over-year rate to +4.2%.
• 08:30 AM Initial jobless claims, week ended April 27 (GS 215k, consensus 210k, last 207k): Continuing jobless claims, week ended April 20 (consensus 1,798k, last 1,781k)
• 10:00 AM Factory orders, March (GS +1.6%, consensus +1.6%, last +1.4%); Durable goods orders, March final (consensus +2.6%, last +2.6%); Durable goods orders ex-transportation, March final (last +0.2%); Core capital goods orders, March final (last +0.2%);Core capital goods shipments, March final (last +0.2%)

Friday, May 3

• 08:30 AM Nonfarm payroll employment, April (GS +275k, consensus +250k, last +303k); Private payroll employment, April (GS +225k, consensus +198k, last +232k); Average hourly earnings (mom), April (GS +0.20%, consensus +0.3%, last +0.3%); Average hourly earnings (yoy), April (GS +3.95%, consensus +4.0%, last +4.1%); Unemployment rate, April (GS 3.8%, consensus 3.8%, last 3.8%); Labor force participation rate, April (GS 62.7%, consensus 62.7%, last 62.7%): We estimate nonfarm payrolls rose by 275k in April (mom sa), reflecting a favorable evolution in the April seasonal factors and a continued boost from above-normal immigration. Big Data measures were mixed but generally indicate a solid or strong pace of job gains, and our layoff tracker continues to indicate that the pace of layoffs is low. We estimate that the unemployment rate edged down but was unchanged on a rounded basis at 3.8%, reflecting a rise in household employment and flat-to-up labor force participation (at 62.7%). Foreign-born unemployment normalized in March, falling sharply by 261k (SA by GS) and limiting the scope for further declines in April. We estimate average hourly earnings rose 0.20% (mom sa), which would lower the year-on-year rate from 4.14% to 3.95%. Our forecast reflects waning wage pressures and a nearly 10bp drag from calendar effects (mom sa).
• 09:45 AM S&P Global US services PMI, April final (consensus 50.9, last 50.9)
• 10:00 AM ISM services index, April (GS 52.1, consensus 52.0, last 51.4): We estimate that the ISM services index rose 0.7pt to 52.1 in April. Our non-manufacturing survey tracker edged up 0.3pt to 52.1.
• 07:45 PM Chicago Fed President Goolsbee (FOMC non-voter) speaks: Chicago Fed President Austan Goolsbee will participate in a panel discussion at the Hoover Institution. A Q&A is expected. On April 19, Goolsbee said, “Right now, it makes sense to wait and get more clarity before moving [rates].” He added, “So far in 2024, that progress on inflation has stalled. You never want to make too much of one month’s data, especially inflation, which is a noisy series, but after three months of this, it can’t be dismissed.”
• 08:15 PM New York Fed President Williams (FOMC voter) speaks: New York Fed President John Williams will speak in a panel discussion at the Hoover Institution. Speech text and a Q&A are expected. On April 18, Williams said, “I definitely don’t feel urgency to cut interest rates…I think interest rates will need to be lower at some point, but the timing of that is driven by the economy.” He added, “We have a strong economy… which means that the rates we have haven’t caused the economy to slow too much.”

Source: DB, Goldman

Authored by Mike Shedlock via MishTalk.com,

Biden and Yellen support a global minimum tax on corporations. And a new wealth tax scheme is now in the works…

Watch Out for a Global Wealth Tax

The Wall Street Journal says Watch Out for a Global Wealth Tax

In our new socialist age, the demand to tax and redistribute income is insatiable. The latest brainstorm arrives in a proposal by four countries in the G-20 group of nations to impose a 2% wealth tax on the world’s billionaires.

“The tax could be designed as a minimum levy equivalent to 2% of the wealth of the super-rich,” write economic ministers of Germany, Spain, Brazil and South Africa in the Guardian. They say the levy would raise about $250 billion a year from some 3,000 billionaires and “would boost social justice and increase trust in the effectiveness of fiscal redistribution.” The countries plan to float this at the next G-20 meeting in June.

Presumably, the plan is to have the G-20 endorse the idea, including President Biden and Treasury Secretary Janet Yellen. Then negotiate a global tax deal that would wait until Democrats control all of the U.S. government to approve it, even if that takes many years.

That’s more or less what Ms. Yellen has done with her global minimum tax on corporations, and the four ministers are candid in saying this is their model. The wealth tax “is a necessary third pillar that complements the negotiations on the taxation of the digital economy and on a minimum corporate tax of 15% for multinationals,” the ministers write.

Ms. Yellen went along with the first two pillars, though as we’ve written they subject American companies to foreign tax raids of the kind the U.S. government has long opposed. An architect of the wealth tax idea is French socialist Gabriel Zucman, who was also behind Ms. Yellen’s global minimum tax. Once a global wealth tax is in place, you can be sure that billionaires won’t be the last target.

The Biden Administration is run by liberal internationalists who are happy to cede more power to multilateral institutions. President Biden is also campaigning on a wealth tax of his own that would impose the highest tax rates on Americans since before the Reagan tax reform. For this crowd, taxing American billionaires to redistribute income around the world is all too imaginable.

I used to dismiss ideas like this. Not anymore.

Letting the G-20 set US tax rates would be unconstitutional, but since when does Biden give a damn?

Besides, if Democrats get control of the Senate, House and White House they may try to pack the courts.

President Biden and Treasury Secretary Janet Yellen embrace a massive wealth tax redistribution scheme including taxes on unrealized gains in their Fiscal Year 2025 proposal.

Advancing Equity Through Tax Reform

Please consider Fiscal Year 2025 Revenue Proposals on Racial Wealth Inequality

The revenue proposals in the Administration’s Fiscal Year 2025 Budget (U.S. Treasury, 2024) would raise revenues, help ensure the wealthy and large corporations pay their fair share, expand tax credits for working families, and improve tax administration and compliance.

Research has demonstrated that wealth gaps are one of the primary “mechanisms for
perpetuating racial economic inequality”.

The millions of African Americans who left the southern United States to escape Jim Crow laws faced formal and informal employment, educational, and housing discrimination in destination cities in the North and West, including discriminatory “redlining” policies that started in the 1930s. In addition to funneling Black households into neighborhoods with lower home values, research has illustrated the extent to which redlining introduced place-based policies that affected the employment, education, and health of residents in those neighborhoods, all of which are directly related to income and wealth accumulation.

Biden’s Wealth Tax Remedy

• A minimum tax of 25 percent on total income, generally inclusive of unrealized capital gains, for all taxpayers with wealth greater than $100 million.

• Requiring the wealthiest taxpayers to pay at least 25% of their total income in taxes will reduce economic disparities among Americans and raise needed revenue

• Inheritance Taxes: In 2019, thirty percent of White families received an inheritance compared to 10 percent of Black families and 7 percent of Hispanic families. The Administration’s Fiscal Year 2025 Budget would limit the duration of the GST [Generation Skipping Trust] tax exemption.

• The Budget would tax long-term capital gains and dividends at ordinary rates for taxpayers with more than $1 million in income, curtailing a tax expenditure the benefits of which accrue disproportionately to White families. It would also treat transfers of appreciated property as realization events and impose a minimum tax on the wealthiest families, while expanding tax credits that improve equity.

Biden Explanations

There’s still more if you dive into General Explanations of the Administration’s Fiscal Year 2025 Revenue Proposals

The explanations are 256 pages long. The following points do not represent all of the ways the administration is coming after you.

I have a 15-point synopsis at the end for those just wishing to see general ideas.

Here are some details.

• The child tax credit would be expanded through 2025, would permanently be made fully refundable, determined monthly, and paid out in advance. Reforms to the delivery of the credit would facilitate take-up. The earned income tax credit would also be expanded to cover more workers without children. The premium tax credit expansion first enacted in the American Rescue Plan Act of 2021 and extended in the Inflation Reduction Act of 2022 would be made permanent, making health insurance more affordable for millions of families.

• Raising the corporate income tax rate is an administratively simple way to raise revenue to pay for the Administration’s fiscal priorities.

• The proposal would increase the tax rate for C corporations from 21 percent to 28 percent. The effective global intangible low-taxed income (GILTI) rate would increase to 14 percent under the proposal.

• The proposal Revise the Global Minimum Tax Regime, Limit Inversions, and Make Related Reforms described later in this text would further increase the effective GILTI rate to 21 percent.

• A new 25- percent minimum income tax would be imposed on extremely wealthy taxpayers. For high income taxpayers, gaps in the law that allow some pass-through business owners to avoid Medicare taxes would be eliminated and Medicare tax rates would be increased. Additional loopholes, including the carried interest preference and the like-kind exchange real estate preference, would be eliminated for those with the highest incomes. Together these reforms would sharply curtail tax preferences that allow the wealthy to pay lower tax rates on their investment income and exacerbate income and wealth disparities, including by gender, geography, race, and ethnicity.

• The child tax credit would be expanded through 2025, would permanently be made fully refundable, determined monthly, and paid out in advance. Reforms to the delivery of the credit would facilitate take-up. The earned income tax credit would also be expanded to cover more workers without children.

• The proposal would increase the tax rate on corporate stock repurchases to 4 percent.

• The Secretary would be granted authority to promulgate any regulations necessary to carry out the purposes of the proposal, including (a) coordinating the application of the proposal with other interest deductibility rules, (b) defining interest and financial services entities, (c) permitting financial reporting groups to apply the proportionate share approach using the group’s net interest expense for U.S. tax purposes rather than net interest expense reported in the group’s financial statements, (d) providing for the treatment of pass-through entities, (e) providing adjustments to the application of the proposal to address differences in functional currency of members, (f) if a U.S. subgroup has multiple U.S. entities that are not all members of a single U.S. consolidated group for U.S. tax purposes, providing for the allocation of the U.S.

• The proposal would repeal: (a) the enhanced oil recovery credit for eligible costs attributable to a qualified enhanced oil recovery project; (b) the credit for oil and gas produced from marginal wells; (c) the expensing of intangible drilling costs; (d) the deduction for costs paid or incurred for any qualified tertiary injectant used as part of a tertiary recovery method; (e) the exception to passive loss limitations provided to working interests in oil and natural gas properties; (f) the use of percentage depletion with respect to oil and gas wells; (g) two year amortization of geological and geophysical expenditures by independent producers, instead allowing amortization over the seven-year period used by major integrated oil companies; (h) expensing of exploration and development costs; (i) percentage depletion for hard mineral fossil fuels; (j) capital gains treatment for royalties; (k) the exemption from the corporate income tax for publicly traded partnerships with qualifying income and gains from activities relating to fossil fuels; (l) the OSTLF and Superfund excise tax exemption for crude oil derived from bitumen and kerogenrich rock; and (m) accelerated amortization for air pollution control facilities.

• The eligibility of the petroleum taxes dedicated to the OSLTF and Superfund for drawback would be eliminated.

• An excise tax on electricity usage by digital asset miners could reduce mining activity along with its associated environmental impacts and other harms. Any firm using computing resources, whether owned by the firm or leased from others, to mine digital assets would be subject to an excise tax equal to 30 percent of the costs of electricity used in digital asset mining.

• The proposal would expand the NIIT base to ensure that all pass-through business income of high-income taxpayers is subject to either the NIIT or SECA tax.

• The proposal would increase the additional Medicare tax rate by 1.2 percentage points for taxpayers with more than $400,000 of earnings. When combined with current-law tax rates, this would bring the marginal Medicare tax rate up to 5 percent for earnings above the threshold. The threshold would be indexed for inflation.

• The proposal would increase the top marginal tax rate to 39.6 percent. The top marginal tax rate would apply to taxable income over $450,000 for married individuals filing a joint return and surviving spouses, $400,000 for unmarried individuals (other than surviving spouses and head of household filers), $425,000 for head of household filers, and $225,000 for married individuals filing a separate return. After 2024, the thresholds would be indexed for inflation using the CPI-U, which is used for all current thresholds in the tax rate tables.

• Under the proposal, the donor or deceased owner of an appreciated asset would realize a capital gain at the time of the transfer. The use of capital losses and carry-forwards from transfers at death would be allowed against capital gains and up to $3,000 of ordinary income on the decedent’s final income tax return, and the tax imposed on gains deemed realized at death would be deductible on the estate tax return of the decedent’s estate (if any). Gain on unrealized appreciation also would be recognized by a trust, partnership, or other noncorporate entity that is the owner of property if that property has not been the subject of a recognition event within the prior 90 years.

• Preferential treatment for unrealized gains disproportionately benefits high-wealth taxpayers and provides many high-wealth taxpayers with a lower effective tax rate than many low- and middle-income taxpayers. Preferential treatment for unrealized gains also exacerbates income and wealth disparities, including by gender, geography, race, and ethnicity. The proposal would impose a minimum tax of 25 percent on total income, generally inclusive of unrealized capital gains, for all taxpayers with wealth (that is, the difference obtained by subtracting liabilities from assets) greater than $100 million.

• The proposal would require a high-income taxpayer with an aggregate vested account balance under tax-favored retirement arrangements that exceeded $10 million as of the last day of the preceding calendar year to distribute a minimum of 50 percent of that excess.

• The provision would prohibit a rollover to a Roth IRA of an amount distributed from an account in an employer-sponsored eligible retirement plan that is not a designated Roth account (or of an amount distributed from an IRA other than a Roth IRA) for a high-income taxpayer.

• Increase the maximum credit per child to $3,600 for qualifying children under age 6 and to $3,000 for all other qualifying children. Increase the maximum age to qualify for the CTC from 16 to 17. The proposal would make the CTC fully refundable, regardless of earned income.

• The first-time homebuyer credit would be equal to ten percent of the purchase price of a home, up to a maximum credit of $10,000. For multiple individuals who purchase a home together, the maximum credit would be allocated proportionally to ownership interest in the purchased home or in a manner determined by the Secretary in published guidance. The credit allocated to a married individual filing a separate return would not exceed $5,000. The home must be in the United States.

• Upon disposition, any measured gain on an item of section 1250 property held for more than one year would be treated as ordinary income to the extent of the cumulative depreciation deductions taken after the effective date of the provision. Depreciation deductions taken on section 1250 property prior to the effective date would continue to be subject to current rules and recaptured as ordinary income only to the extent that such depreciation exceeds the cumulative allowances determined under the straight-line method. Any gain recognized on the disposition of section 1250 property in excess of recaptured depreciation would be treated as section 1231 gain. Any unrecaptured gain on section 1250 property would continue to be taxed to noncorporate taxpayers at a maximum 25 percent rate.

• In general, no Federal income tax is imposed concurrently on a policyholder with respect to the earnings credited under a life insurance or endowment contract. Furthermore, amounts received under a life insurance contract by reason of the death of the insured generally are excluded from the gross income of the recipient. The proposal would limit the tax benefits for private placement life insurance and annuity contracts.

• The proposal would expand the regulatory authority under which the Secretary may require taxpayers to furnish information relating to the verification and computation of the FTC [Foreign Tax Credit].

• A separate proposal would first raise the top ordinary rate to 39.6 percent (43.4 percent including the net investment income tax). An additional proposal would increase the net investment income tax rate by 1.2 percentage points above $400,000, bringing the marginal net investment income tax rate to 5 percent for investment income above the $400,000 threshold. Together, the proposals would increase the top marginal rate on long-term capital gains and qualified dividends to 44.6 percent.

Massive Wealth Distribution Scheme.

The administration went after anything and everything from wealth taxes, huge jumps in marginal rates, REIT, Roth IRA conversions, etc.

Here are the key changes, and I may have missed some.

Fifteen Key Points

1. The top marginal rate on long-term capital gains jumps to 44.6 percent.

2. Deductions for oil and gas companied eliminated.

3. 30 percent tax on electricity used in mining cryptos

4. Restrictions on conversions to Roth IRA

5. Forced acceleration of IRA withdrawals

6. Taxes on insurance policies

7. Expanded Child Tax Credits

8. Earned Income Tax Credits to include those with no kids.

9. Restrictions on trusts to avoid inheritance taxes

10. Corporate minimum taxes

11. Homebuyer tax credits

12. Minimum 25 percent tax on unrealized stock gains for wealthy individuals

13. Marginal Medicare tax rate upped to 5 percent

14. Tax rate for C corporations goes to 28 percent from 21 percent. The effective global intangible low-taxed income (GILTI) rate would increase to 14 percent.

15. If there is anything ambiguous, the Secretary of the Treasury gets to determine what the law is.

If you have any money or assets, Biden is coming after you. He is also going after oil and gas companies, corporations, and Bitcoin to fund massive wealth distribution schemes.

This is on grounds “Research has demonstrated that wealth gaps are one of the primary mechanisms for perpetuating racial economic inequality“.

Soon on the heels of President Biden last week signing into law a $61 billion aid package for Ukraine’s defense, President Volodymyr Zelensky on Sunday indicated that he’s working with Washington on a bilateral security agreement which would last ten years.

“We are already working on a specific text,” Zelensky said in his nightly video address. “Our goal is to make this agreement the strongest of all.”

“We are discussing the specific foundations of our security and cooperation. We are also working on fixing specific levels of support for this year and the next 10 years.”

He indicated it will likely include agreements on long-term support centering on military hardware and joint arms production, as well as continuing reconstruction aid. “The agreement should be truly exemplary and reflect the strength of American leadership,” Zelensky added.

But ultimately a key purpose in locking such a long-term deal in would be to keep it immune from potential interference by a future Trump administration.

Below is what The Wall Street Journal spelled out last year:

The goal is to make sure Ukraine will be strong enough in the future to deter Russia from attacking it again. More immediately, Ukraine’s Western allies hope to discourage the Kremlin from thinking it can wait out the Biden administration for a potentially more sympathetic successor in the White House. 

Western officials are looking for ways to lock in pledges of support and limit future governments’ abilities to backtrack, amid fears in European capitals that Donald Trump, if he recaptures the White House, would seek to scale back aid. Trump has a wide lead in early polling in the Republican presidential primary field, but soundly lost the 2020 election to President Biden and has been indicted in four criminal cases in state and federal courts. 

We and others have previously underscored that NATO and G7 countries are desperately trying to “Trump-proof” future aid to Ukraine and the effort to counter Russia.

As for its first new weapons package in the wake of the $61 billion being authorized, the Biden administration has announced new arms packages totaling $7 billion. The US has vowed to rush the weapons to Kiev, given that by all indicators its forces are not doing well on the frontlines.

“We are still waiting for the supplies promised to Ukraine – we expect exactly the volume and content of supplies that can change the situation on the battlefield in the interests of Ukraine,” Zelensky had said over the weekend. “And it is important that every agreement we have reached is implemented – everything that will yield practical results on the battlefield and boost the morale of everyone on the frontline. In a conversation with Mr. Jeffries, I emphasized the need for Patriot systems, they are needed as soon as possible.”

Zelensky announces that Ukraine is working on a security agreement with the U.S. that will fix levels of support for the next 10 years. The $61 billion was just the beginning. The next two U.S. presidents won’t be able to switch it off. pic.twitter.com/q1RWCxf93m

— David Sacks (@DavidSacks) April 28, 2024

But all of this means the war will be prolonged, and this puts negotiations much further away on the horizon, despite what are now daily acknowledgements of Ukraine forces being beaten back. Currently the governments of Greece and Spain are being pressured by EU and NATO leadership to hand over what few Patriot systems they possess to Kiev. The rationale is that they don’t need them as urgently as Ukraine does.

By Vassilis Karamanis, Bloomberg Markets Live reporter and FX strategist

Unless Japanese authorities show their hand with conviction when it comes to intervening in the spot market, the yen is bound to stay under pressure over the medium-term.

The currency’s sharp rally this morning certainly looks like an intervention — it’s not often that we get a 500-pip move seemingly out of nowhere. But thin liquidity due to a public holiday in Japan that forced algorithmic trading to take over as trailing stops were triggered could be what’s driven the market. The fact that traders aren’t sure this is an official hand supporting the yen is telling. Masato Kanda, the nation’s top currency official, said no comment when asked about the moves.

The market has been testing Japanese authorities’ patience — or determination — when it comes to yen weakness for some time now. And it will keep on doing so for as long as intervention threats are seen as a clumsily-played bluff.

The yen kept breaching through one big level after the other on Friday against the dollar and everyone’s question was whether we would finally have official yen buying before a long weekend in Japan. The answer was an emphatic no.

Did price action Friday actually give Japanese authorities the green light to intervene in the spot market?

The yen fell by the most since October on an intraday basis, for a two standard-deviation move; one-week realized volatility touched a one-month high

It was down 3.5% on a ten-day basis; Kanda said that a 4% move over two weeks doesn’t reflect fundamentals and is unusual
Over one month, the dollar was up by around seven big figures against the Japanese currency; Kanda has said that a 10-yen move over such a time period is considered rapid.

So in nominal terms, we could argue it was justified that no intervention took place, given a simple rates-check during a Japan holiday could actually do the trick. But in real terms, no one would blame Japanese authorities if they went beyond their official guidelines to step in the spot market. It’s not just about the 350-pip day range that took place. It’s the starting point that also matters. Fresh 34-year lows were hit Thursday.

Traders could see lack of official yen buying as an attempt to find excuses in order to stay pat. After all, a weaker currency in theory accelerates inflationary dynamics that will eventually support the Bank of Japan as to signal a more-aggressive-than priced in tightening bias — which could really be a game changing moment for the currency, especially if at the same time the Federal Reserve will indeed be close to easing its own policy.

And as long as credibility comes to the question, the more confident traders will be to re-add dollar longs in case the Ministry of Finance does decide to intervene. There was some speculation during the weekend that Japan is waiting for the Fed meeting and the release of the next US jobs report due this week before deciding to press the button. To me, it doesn’t matter so much if this is credible thinking, but the mere fact traders are discussing it shows the ball is moving away from officials’ court.

It’s not easy going against a central bank. In poker terms, policymakers always start the game with a pair of aces. But the flop did no favors to them and their raise on the turn looks miscalculated. Maybe the upcoming river will see traders winning this hand despite Monday’s retreat for the dollar that at the time of writing has no official confirmation it was down to spot intervention.

Shares of Royal Philips on Euronext Amersterdam surged as much as 43% Monday, the most on record after a lower-than-expected settlement in the US linked to faulty Respironics ventilators for sleep apnea.

The Dutch medical equipment manufacturer recalled the therapy devices due to concerns that the noise-canceling foam inside them was disintegrating, which patients inhaled. 

Some Wall Street analysts predicted the company would have to spend as much as $4.5 billion to $10 billion to cover the medical monitoring class-action lawsuit and individual personal injury claims in the US. However, the company only had to set aside $1.1 billion. 

Barclays analysts wrote in a note that this earlier-than-expected settlement “removes an overhang many have worried would linger for years.” 

Faulty sleep therapy devices have weighed on Philips’s shares since April 2021, tumbling as much as 76% from 48 euros a share to $11.6 in October 2022. Despite today’s 43% surge, shares are still down 40% from the highs recorded in 2021. 

Today’s 43% jump is the largest daily percentage gain ever – beating out the 14.6% gain in 2002. 

The vicious upswing will likely squeeze bears. Data from S&P Global Market Intelligence shows shares out on loan, or an indication of short interest, represented about 4.9% of the company’s float as of Thursday. 

Here’s how Wall Street responded to the news (list courtesy of Bloomberg): 

Barclays (overweight)

• The $1.1b settlement compares with buyside expectations of $2b-$4b, with “worst case fears” of $10b, analyst Hassan Al- Wakeel writes in a note
• The earlier-than-expected settlement also “removes an overhang many have worried would linger for years”

Bernstein (market perform)

• The settlement amount is less than expected, while the timing is “sooner than thought,” analyst Lisa Bedell Clive writes in a note
• Bernstein had been working on the assumption that there was a 35% chance of a €3.8b personal injury settlement, and a 35% chance of a €766m medical monitoring lawsuit
• The settlement “removes another overhang on the stock”

Jefferies (underperform)

• The unexpected $1.1 billion settlement is “much milder than feared,” marking the “end of litigation uncertainty,” analyst Julien Dormois writes in a note
• The 1Q results beat expectations, though order growth fell again

Morgan Stanley (equal weight)

• The settlement figure is below expectations and should be well received, analyst Robert Davies writes in a note
• There’s scope for FY earnings estimates to be increased by low-single-digits
• Morgan Stanley sees questions being raised about the “softness” around the diagnostics & treatment performance, as well as the timeline around a resolution on the consent decree

Philips CEO Roy Jakobs joined Bloomberg TV after the settlement news. He said, “The settlement covers all the claims in the US, even the ones that would come in still over the next six months.” 

Authored by Daniel Lacalle,

The weak GDP figure for the first quarter came with a double negative. Poor consumer spending and exports, plus a rise in core inflation, The US administration’s enormous fiscal stimulus, underscores the importance of considering the weaker-than-expected data.

A deceleration in consumer spending, a decline in the personal savings ratio to 3.6%, and poor exports added to a set of figures for investment that were also negative when we looked at the details.

The gross domestic product is much weaker than the headlines suggest. If we look at consumption, both durable and non-durable goods were flat or down, while the only item that increased modestly was the services factor. Residential and intellectual property boosted investment, while equipment remained weak in the past two quarters. The slump in export growth coincided with a significant increase in imports, which weakened the trade deficit. Government spending continues to rise, albeit at a slower pace, and becomes the main factor to disguise what is evidently a concerning level of growth for a leading economy with enormous potential.

It is precisely because of the unnecessary increase in government spending, designed to bloat GDP and provide a false sense of strength in the economy, that inflation remains elevated and rising in a three- and six-month period.

Rising public debt has bloated the economy and left it at a disappointing level compared to its potential, as evidenced by higher inflation and weaker growth.

When the Fed’s preferred inflation measure rises to 2.8% in March from a year ago and the core PCE deflator rises to 3.1%, there is no strong economy. The propaganda repeatedly claims that the fight against inflation is over, but inflation has accelerated on a quarterly and half-year basis.

It is important to understand why these figures are negative. The average American household is poorer. Rising inflation and declining savings, non-existent real wage growth, employment-to-population, and the labor force participation rates remain below 2019 levels, and bloating GDP with an unacceptable deficit means higher taxes, lower growth, and weaker real wages in the future.

We must remember that Biden’s economic plan started with a full-blown recovery in place. This administration did not suffer the consequences of the COVID-19 lockdowns. By the time the Biden administration arrived, America was already creating almost 250,000 jobs a month.

Biden should have picked the fruits of a fast-recovering economy that is almost energy independent and therefore should not have suffered the impact of the war on Ukraine while enjoying the tail winds of the largest fiscal and monetary stimulus.

The multiplier effect of the chain of implemented government programs may have inflated GDP, but gross domestic income (GDI) presented a significantly different picture. The GDI revealed a stagnant economy with persistent inflation.

The government’s wasteful spending of newly printed money is adding gasoline to inflationary pressures, a result of careless fiscal policy and massive deficit spending. When the government prints more money than the private sector needs, inflation occurs, and the purchasing power of that money decreases.

The evidence from the past four years indicates that if the government had abandoned its spending and tax hike plans, the United States economy would have recovered better and with higher productivity growth. Despite the recovery, tax revenues fell short of expectations and spending rose to create what is now a completely unacceptable deficit.

Many economists argue that the economy is growing, and that inflation is a secondary problem. Not for the average American. Citizens are poorer in absolute and relative terms.

Consensus was wrong about the expected multiplier effect of government spending on growth and also about inflation because market participants decided to ignore monetary aggregates and the reality of unproductive spending.

Can the United States government boast this level of growth? One could argue that delivering $1.6 trillion of GDP with a $2 trillion increase in debt is not a success. This isn’t growing; it’s getting fatter. This negative situation has not improved since 2024. Every 100 days, the U.S. national debt rises by $1 trillion. Therefore, this means more taxes, less growth, and weaker real wages in the future. We can conclude that the United States’ public finances would be stronger, and the economy would be more productive if the gigantic public spending packages and tax hikes had not been implemented.

The United States administration needs to focus more on the productive sector and less on increasing the size of the bureaucratic machine. Even if the rise in mandatory spending is offset by cuts in discretionary spending, it will still be difficult to reduce debt. Therefore, prioritizing is key. Taxes are already high enough, and there is plenty of evidence that shows how the recent increase in the tax wedge for businesses and families has made the economy weaker.

The government needs to understand that it is the cause of inflation. Only the government can make all prices rise in unison and continue to increase, and it achieves this by diluting the purchasing power of the currency and issuing more than demanded.

The next two quarters are going to be key to understanding the extent of the damage caused by reckless fiscal spending.

The US government has sabotaged the Federal Reserve’s modestly hawkish policy. The public deficit has added up to $2 trillion of newly created money per year, only to deliver less economic growth and cancel out the now insignificant $1.6 trillion decline in the Fed’s balance sheet. Whether there are rate hikes or not, the Fed cannot achieve price stability if the Treasury ignores all warning signs and adds more debt.

Since 2018, the United States has added roughly $7 trillion of GDP, while the government has increased debt by $12 trillion. Implementing fiscal stimulus by increasing expenditures and raising taxes is clearly ineffective.

Markets ignore the Fed’s hawkish messages because they see insane public debt and unsustainable deficit spending, and participants know that monetary destruction will resume regardless of persistent inflation.

There is plenty of time to correct the inflation and low growth problems. There is only one measure that will help: cut spending. Everything else has failed.

Two full years of inflation have taken their toll on American households. In 2023, the country’s collective credit card debt crossed $1 trillion for the first time. So who is managing to save money in the current economic environment?

Visual Capitalist’s Pallavi Rao visualizes the percentage of respondents to the statement “I have money leftover at the end of the month” categorized by age and education qualifications. Data is sourced from a National Endowment for Financial Education (NEFE) report, published last month.

The survey for NEFE was conducted from January 12-14, 2024, by the National Opinion Research Center at the University of Chicago. It involved 1,222 adults aged 18+ and aimed to be representative of the U.S. population.

Older Americans Save More Than Their Younger Counterparts

General trends from this dataset indicate that as respondents get older, a higher percentage of them are able to save.

Note: Percentages are rounded and may not sum to 100.

Perhaps not surprisingly, those aged 60+ are the age group with the highest percentage saying they have leftover money at the end of the month. This age group spent the most time making peak earnings in their careers, are more likely to have investments, and are more likely to have paid off major expenses like a mortgage or raising a family.

The Impact of Higher Education on Earnings and Savings

Based on this survey, higher education dramatically improves one’s ability to save. Shown in the table below, those with a bachelor’s degree or higher are three times more likely to have leftover money than those without a high school diploma.

Note: Percentages are rounded and may not sum to 100.

As the Bureau of Labor Statistics notes, earnings improve with every level of education completed.

For example, those with a high school diploma made 25% more than those without in 2022. And as the qualifications increase, the effects keep stacking.

Meanwhile, a Federal Reserve study also found that those with more education tended to make financial decisions that contributed to building wealth, of which the first step is to save.

German Defense Minister Boris Pistorius and his French counterpart, Sebastien Lecornu, announced Friday the two countries will produce the next-generation battle tank to replace Germany’s Leopard 2 tank that will land on modern battlefields in the late 2030s or early 2040s. 

“It’s not about making a Leopard 3 or 4; it’s about designing something brand new,” German defense minister Pistorius said, as quoted by Euronews. 

Pistorius said the next-gen main battle tanks will be equipped with artificial intelligence and will not require “human pilots.” 

French defense ministry Lecornu said KNDS, Rheinmetall, Thales, and other defense manufacturers will begin work on the ‘tank of the future’—formally known as the Main Ground Combat System (MGCS). 

Developing a next-generation tank comes as there have been countless reports that Russian armed forces have destroyed Leopard 2 tanks operated by the Ukranian Army. 

• Confirmed: Russians Just Destroyed Their First Leopard 2 Tank, Bradley Fighting Vehicles

And this… 

• Ukraine’s Leopard 2 Tanks Are Nearly All Destroyed Or Broken

Germany and France are also pushing to build the next-generation fighter jet, called the Future Combat Air System, which is set to enter service in 2040, along with integrated drone fleets. 

The trend is that a world emerging into a multi-polar state has sparked a surge in military spending worldwide. 

A new Stockholm International Peace Research Institute report detailed how global military expenditures hit a record high of $2.44 trillion in 2023. 

We’ve diligently noted that the defense sector is in a bull market: 

• World Stumbles Into “More Dangerous Decade” As Defense Spending Soars, Says Military Think Tank
• Germany Reportedly Goes On Military Spending Spree To Hit NATO Spending Minimums For First Time
• Lockheed Martin Wins $17BN Interceptor Contract To Protect US Homeland
• German Tank Builder Says “New Decade Of Security Policy Begins” As Defense Bull Market Roars
• SAAB CEO Says Rising War Risk Drives Defense Spending; Missile Stocks In Bull Market

Global defense stocks, tacked by MSCI, have surged to record highs. 

The chaos in the world is not going away. Everything is up for grabs.