Trump Rakes In Record-Breaking $39 Million Fundraising Haul After Guilty Verdict
Former President Donald Trump announced on Friday that his campaign brought in around $39 million following his guilty verdict on 34 counts of falsifying business records in his New York ‘hush money’ trial.
“From just minutes after the sham trial verdict was announced, our digital fundraising system was overwhelmed with support, and despite temporary delays online because of the amount of traffic, President Trump raised $34.8 million dollars from small dollar donors,” said Trump Campaign Senior Advisors Chris LaCivita and Susie Wiles.
“Not only was the amount historic, but 29.7% of yesterday’s donor’s were brand new donors to the WinRed platform,” they continued. “President Trump and our campaign are immensely grateful from this outpouring of support from patriots across our country. President Trump is fighting to save our nation and November 5th is the day Americans will deliver the real verdict.”
According to the pair, the fundraising total broke the campaign’s previous record for small-dollar donations in a day – of which 30% donated through the WinRed platform, which is used by Republican candidates for fundraising.
Of note, $300,000 of Trump’s haul came from former Dem donor and Sequoia Capital partner Shaun Maguire, who wrote in a Thursday post on X, “I know that I’ll lose friends for this. Some will refuse to do business with me. The media will probably demonize me, as they have so many others before me. But despite this, I still believe it’s the right thing to do.“
Google search data shows Americans in every state panic searched “Donate to Trump,” exceeding highs seen in the last presidential election.
Trump was found guilty on all 34 counts of falsifying business records to conceal an alleged affair with porn star Stormy Daniels. Trump pleaded not guilty and is expected to appeal the verdict.
Meanwhile, Hillary Clinton has entered the chat – and is gloating over Trump’s courtroom loss with “She Was Right” mugs.
A new human case of highly pathogenic avian influenza has been confirmed, officials at the U.S. Centers for Disease Control and Prevention (CDC) said on May 30.
The patient is a Michigan resident who works with dairy cows. The patient’s age, gender, and work location weren’t disclosed by federal or state officials.
The patient likely contracted the bird flu from cattle, officials said. The person experienced symptoms after “direct exposure to an infected cow,” Dr. Natasha Bagdasarian, Michigan’s chief medical executive, said in a statement.
The case is the third confirmed among humans in the United States this year. The previously confirmed cases, one each in Texas and Michigan, also cropped up in farm workers.
Both of those workers experienced inflamed eyes and have since recovered, as did a person who contracted the illness in Colorado in 2022.
Globally, more than half of cases reported to the World Health Organization since the early 2000s have resulted in death.
The new case is from a different farm than the earlier case in the state, according to Michigan authorities.
The new patient experienced symptoms including cough without fever and eye discomfort with watery discharge. The person was given an antiviral, is isolating at home, and is seeing the resolution of their symptoms, according to the CDC.
Antivirals used against influenza include oseltamivir, also known as Tamiflu.
The person wasn’t wearing personal protective equipment (PPE).
“This tells us that direct exposure to infected livestock poses a risk to humans, and that PPE is an important tool in preventing spread among individuals who work on dairy and poultry farms,” Dr. Bagdasarian said.
None of the patient’s contacts have developed symptoms, and none of the farm’s other workers have reported symptoms.
There’s no signs of person-to-person transmission of the influenza, also known as the bird flu or H5N1, CDC and Michigan officials said.
While the CDC maintains that the risk to the general public is low, it says farm workers are at greater risk and advises them to take a number of precautions, including wearing masks and gloves when dealing with animals with suspected or confirmed cases.
There are about 105,800 workers on U.S. dairy farms as of 2023, according to IBISWorld.
The bird flu jumped to cows in late 2023 or earlier this year, according to U.S. Department of Agriculture scientists.
Cases have since been confirmed in 67 herds across nine states, including Michigan, the department says.
The flu has also spread to other species in recent years, including foxes, bears, and alpacas.
US Floats Bulk Milk Testing
The Department of Agriculture (USDA) recently proposed allowing farmers to bulk test the milk of their dairy cows for bird flu rather than test milk from individual cows before gaining approval to ship them across state lines, according to state and industry officials and agency documents.
The department in late April began requiring lactating cows to test negative before being shipped across state lines. It later said the order likely helped prevent the spread of the virus to new states.
The USDA reported 2,492 pre-movement tests as of Wednesday but said that number does not equal the number of animals tested.
A pilot program for bulk testing milk could begin in June for farmers who choose to participate, according to documents the USDA sent to industry officials this week.
Agriculture officials in six states said on May 29 they were reviewing the USDA’s proposal for the program. The USDA declined to comment.
“Once it has support and participation from farms, the USDA program could help reduce the threat of H5N1 in dairy herds, further mitigate risk among farm workers, and continue to protect our nation’s commercial milk supply,” the International Dairy Foods Association said in a statement.
The U.S. Food and Drug Administration estimated that 20 percent of the U.S. milk supply shows signs of the virus, although further testing found no viable virus.
Farmers said testing milk from bulk storage tanks offers the chance to collect a sample from all the cows within a herd and would be more efficient than testing samples from individual animals.
Bulk tanks of milk from individual herds would need three consecutive weeks of negative testing results to show the herd is free of bird flu and enter the new program, according to USDA documents dated May 24.
Farmers would then need to submit milk samples from bulk tanks weekly to maintain their status, the documents say. Continued negative results would mean no additional testing is needed before shipping cattle between states, according to the documents.
Three weeks of testing milk from bulk tanks isn’t enough to confirm a herd is free of bird flu, though, said Gail Hansen, a veterinary and public health consultant. Samples from healthy cows could dilute samples from a small number of infected cattle in the same herd when their milk mixes in the tank, she said.
“It may give people a false sense of assurance,” Ms. Hansen said.
NATO Chief Pushes Allies To Commit $44 Billion In Defense Aid To Ukraine Annually
Currently NATO defense and foreign ministers are gathered in Prague for two days of meetings as part of preparations for the major Washington Summit in July. At the meeting chaired by the alliance’s Secretary General Jens Stoltenberg he urged that NATO countries must maintain support to Ukraine “for as long as necessary”.
Stoltenberg is asking 32 NATO members to commit a whopping $44 billion in military aid to Ukraine every year. President Zelensky has been urging more immediate aid to come at a faster rate, meanwhile.
Stoltenberg told the meeting in Prague, “Russia must understand that it cannot wait us out.” He reasoned further that “Allies have provided approximately 40 billion euros worth of military aid to Ukraine each year.”
He said that for Ukraine to have battlefield success, NATO countries must maintain “at least” current levels of support to Ukraine for as long as the fight continues.
Even though it has become clear that Ukraine front lines are crumbling, especially in places like Kharkiv oblast near the Russian border, this new initiative by Stoltenberg appears geared toward locking the alliance into further permanent commitments, lest any should waiver down the road.
Under the $100 billion proposal, counties would contribute aid equal to their financial commitment to the alliance. The US pays for about a quarter of NATO’s annual budget. If Stoltenberg seeks to lock in member states at their current commitment, the US will contribute over half of all aid, about $25 billion annually.
NATO has been seeking a multi-year pledge from its members to supply arms to Ukraine. The commitment is meant to lock in assistance for Kiev even if a nation would later decide to alter course. The initial proposal from Stoltenberg was for NATO to commit $108 billion over five years.
Meanwhile a US official speaking to The New York Times has said the conflict has entered “a new reality” and “perhaps a new era” after Thursday’s White House decision to allow Ukraine to strike inside Russian territory using US-supplied weapons systems.
Jeffrey Sachs with probably the smartest and most accurate assessment of the Ukraine war, and American foreign policy more broadly, ever caught on tape.
(20:17) Why did America push for Ukraine to Join NATO?
(58:34) What is a Neocon?
(1:25:28) Regime Change Never Works
(1:36:27)… pic.twitter.com/uNzzDDzn1L
“The president recently directed his team to ensure that Ukraine is able to use U.S.-supplied weapons for counter-fire purposes in the Kharkiv region so Ukraine can hit back against Russian forces that are attacking them or preparing to attack them,” an administration statement confirmed. “Our policy with respect to prohibiting the use of ATACMS or long-range strikes inside of Russia has not changed,” the statement added.
Each of the last five presidents, both Democrats and Republicans, have brought us closer to the brink. We desperately need leaders with a knack for peace who can steer the nation, and the world, toward a more secure and less dangerous future.
The overriding job of any U.S. president is to keep the nation safe. In the nuclear age, that mainly means avoiding nuclear Armageddon. Joe Biden’s reckless and incompetent foreign policy is pushing us closer to annihilation. He joins a long and undistinguished list of presidents who have gambled with Armageddon, including his immediate predecessor and rival, Donald Trump.
Talk of nuclear war is currently everywhere. Leaders of NATO countries call for Russia’s defeat and even dismemberment, while telling us not to worry about Russia’s 6,000 nuclear warheads. Ukraine uses NATO-supplied missiles to knock out parts of Russia’s nuclear-attack early-warning system inside Russia. Russia, in the meantime, engages in nuclear drills near its border with Ukraine. U.S. Secretary of State Antony Blinken and NATO Secretary-General Jens Stoltenberg give the green light to Ukraine to use NATO weapons to hit Russian territory as an increasingly desperate and extremist Ukrainian regime sees fit.
These leaders neglect at our greatest peril the most basic lesson of the nuclear confrontation between the U.S. and Soviet Union in the Cuban Missile Crisis, as told by President John F. Kennedy, one of the few American presidents in the nuclear age to take our survival seriously. In the aftermath of the crisis, Kennedy told us, and his successors:
Above all, while defending our own vital interests, nuclear powers must avert those confrontations which bring an adversary to a choice of either a humiliating retreat or a nuclear war. To adopt that kind of course in the nuclear age would be evidence only of the bankruptcy of our policy—or of a collective death-wish for the world.
Yet this is exactly what Biden is doing today, carrying out a bankrupt and reckless policy.
Nuclear war can easily arise from an escalation of non-nuclear war, or by a hothead leader with access to nuclear arms deciding on a surprise first strike, or by a gross miscalculation. The last of these nearly occurred even after Kennedy and his Soviet counterpart Nikita Khrushchev had negotiated an end to the Cuban Missile Crisis, when a disabled Soviet submarine came within a hair’s breadth of launching a nuclear-tipped torpedo.
The Doomsday Clock was at 17 minutes to midnight when Clinton came to office, but just 9 minutes when he left it. Bush pushed the clock to just 5 minutes, Obama to 3 minutes, and Trump to a mere 100 seconds. Now Biden has taken the clock to 90 seconds.
Most presidents, and most Americans, have little idea how close to the abyss we are. The Bulletin of Atomic Scientists, which was founded in 1947 in part to help the world avoid nuclear annihilation, established the Doomsday Clock to help the public understand the gravity of the risks we face. National security experts adjust the clock depending how far or how close we are to “midnight,” meaning extinction. They put the clock today at just 90 seconds to midnight, the closest that it’s ever been in the nuclear age.
The clock is a useful measure of which presidents have “gotten it” and which have not. The sad fact is that most presidents have recklessly gambled with our survival in the name of national honor, or to prove their personal toughness, or to avoid political attacks from the warmongers, or as the result of sheer incompetence. By a simple and straightforward count, five presidents have gotten it right, moving the clock away from midnight, while nine have moved us closer to Armageddon, including the most recent five.
Truman was president when the Doomsday Clock was unveiled in 1947, at 7 minutes to midnight. Truman stoked the nuclear arms race and left office with the clock at just 3 minutes to midnight. Eisenhower continued the nuclear arms race but also entered into the first-ever negotiations with the Soviet Union regarding nuclear disarmament. By the time he left office, the clock was put back to 7 minutes to midnight.
Kennedy saved the world by coolly reasoning his way through the Cuban Missile Crisis, rather than following the advice of hothead advisors who called for war (for a detailed account, see Martin Sherwin’s magisterial Gambling with Armageddon, 2020). He then negotiated the Partial Nuclear Test Ban Treaty with Khrushchev in 1963. By the time of his death, which may well have been a government coup resulting from Kennedy’s peace initiative, JFK had pushed the clock back to 12 minutes to midnight, a magnificent and historic achievement.
It was not to last. Lyndon Johnson soon escalated in Vietnam and pushed the clock back again to just 7 minutes to midnight. Richard Nixon eased tensions with both the Soviet Union and China, and concluded the Strategic Arms Limitation Treaty (SALT I), pushing the clock again to 12 minutes from midnight. Yet Gerald Ford and Jimmy Carter failed to secure SALT II, and Carter fatefully and unwisely gave a green light to the CIA in 1979 to destabilize Afghanistan. By the time Ronald Reagan took office, the clock was at just 4 minutes to midnight.
The next 12 years marked the end of the Cold War. Much of the credit is due to Mikhail Gorbachev, who aimed to reform the Soviet Union politically and economically, and to end the confrontation with the West. Yet credit is also due to Reagan and his successor George Bush, Sr., who successfully worked with Gorbachev to end the Cold War, which in turn was followed by the end of the Soviet Union itself in December 1991. By the time Bush left office, the Doomsday clock was at 17 minutes to midnight, the safest since the start of the nuclear age.
Sadly, the U.S. security establishment could not take “Yes” for an answer when Russia said an emphatic yes to peaceful and cooperative relations. The U.S. needed to “win” the Cold War, not just end it. It needed to declare itself and prove itself to be the sole superpower of the world, the one that would unilaterally write the rules of a new U.S.-led “rules-based order.” The post-1992 U.S. therefore launched wars and expanded its vast network of military bases as it saw fit, steadfastly and ostentatiously ignoring the red lines of other nations, indeed aiming to drive nuclear adversaries into humiliating retreats.
Jeffrey Sachs with probably the smartest and most accurate assessment of the Ukraine war, and American foreign policy more broadly, ever caught on tape.
(20:17) Why did America push for Ukraine to Join NATO?
(58:34) What is a Neocon?
(1:25:28) Regime Change Never Works
(1:36:27)… pic.twitter.com/uNzzDDzn1L
Since 1992, every president has left the U.S. and the world closer to nuclear annihilation than his predecessor. The Doomsday Clock was at 17 minutes to midnight when Clinton came to office, but just 9 minutes when he left it. Bush pushed the clock to just 5 minutes, Obama to 3 minutes, and Trump to a mere 100 seconds. Now Biden has taken the clock to 90 seconds.
Biden has led the U.S. into three fulminant crises, any one of which could end up in Armageddon. By insisting on NATO enlargement to Ukraine, against Russia’s bright red line, Biden has repeatedly pushed for Russia’s humiliating retreat. By siding with a genocidal Israel, he has stoked a new Middle East arms race and a dangerously expanding Middle East conflict. By taunting China over Taiwan, which the U.S. ostensibly recognizes as part of one China, he is inviting a war with China. Trump similarly stirred the nuclear pot on several fronts, most flagrantly with China and Iran.
Washington seems of a single mind these days: more funding for wars in Ukraine and Gaza, more armaments for Taiwan. We slouch ever closer to Armageddon. Polls show the American people overwhelmingly disapprove of U.S. foreign policy, but their opinion counts for very little. We need to shout for peace from every hilltop. The survival of our children and grandchildren depends on it.
Japan Confirms It Spent A Record $62 Billion In Failed Attempt To Prop Up Yen
Confirming what everyone knew, this morning Japan’s finance ministry confirmed that it spent a record ¥9.8 trillion ($62.2 billion) over the past month, but really on two occasions, in a failed attempt to prop up the yen after it fell to a 34-year low against the dollar, surpassing the total amount it used during the last intervention in 2022 to defend the currency, which also failed to prop up the doomed currency.
According to Bloomberg, the amount – which covered the period from April 26 to May 29 but really involves the two interventions observed on April 29 and May 1 – exceeded earlier estimates of ¥9.4 trillion based on a comparison of the Bank of Japan’s accounts and money broker forecasts.
The record spending on intervention shows what according to Bloomberg is “the commitment of Japan’s government” to push back against speculators betting against the yen. The huge amount also underscores the scale of action required to have even a short-lived impact on the market and the gradually diminishing power of its salvos to defend the currency.
In keeping with the cartoon nature of the BOJ, Locals had similar cartoonish observations of their central bank blowing tens of billions for literally nothing: “The amount feels a touch on the large side, but it’s largely in the expected range,” said Hirofumi Suzuki, FX strategist at Sumitomo Mitsui. “It didn’t top ¥10 trillion so it doesn’t feel too big and the dollar-yen pair isn’t actually reacting much.”
The previous round of MOF intervention was conducted over three occasions in September-October 2022, with a total intervention amount of ¥9.2 tn (September 22: ¥2.8 tn, October 21: ¥5.6 tn, October 24: ¥730 bn). The intervention this time was yet another large-scale operation, surpassing the previous size in JPY terms. The 2022 and the latest interventions were equivalent measured in USD at around $62bn. Prior to this, Japan’s last monthly intervention record of ¥9.1 trillion was set in very different circumstances when authorities were trying to weaken the yen in autumn 2011 following the repatriation flood in the aftermath of the Fukushima explosion.
At the time of interventions, the USDJPY was around ¥160/US$ on April 29 and ¥157.6 on May 2, and while it dropped as low as 153 in the immediate aftermath, the yen is now back to where it was at the time of the second intervention, trading around 157. And while Japan has failed to arrest the collapse of the currency, it has at least managed to reduce the volatility (read explosive momentum collapse) for now. One thing is certain: speculators will push the yen even lower to test just how much more dry powder the BOJ has left after this latest failed intervention, and whether they will spend another $62 billion for nothing. Since the answer is almost certainly no, and since Japan now clearly wants a weaker yen, expect the yen collapse to accelerate in coming weeks.
Currency officials in Japan are aware that their efforts simply buy time rather than reverse dynamics. From that perspective the interventions have been relatively successful. While the yen has given up a large portion of the gains from a month ago, it still hasn’t returned to the 160 mark against the dollar.
“You can’t really say how much impact you’ll get from spending a certain amount of money, since markets are like living creatures,” said Hideo Kumano, executive economist at Dai-Ichi Life Research Institute and a former central bank official. “But without the intervention, the yen would have weakened even more, so I believe that the roughly 10 trillion yen operation was effective.”
We wonder what Hideo will say when the USDJPY is at 200 in a few months time.
China’s proposal of a 300 billion Yuan bank loan to rescue the housing sector is obviously a tiny amount compared to the amount outstanding; I discussed this in last week’s piece here.
At first glance, it looks odd that the proposal orders banks to play the role of lender of last resort instead of the central bank. For most countries facing such a huge crisis, the central bank printing money and injecting liquidity is almost the designated act.
Interestingly, however, the People’s Bank of China did not do anything like this, and there was not even a rate cut cycle.
The reason for such inaction might be severalfold.
First, as discussed here previously, is due to infighting. The billionaires are potential threats to the existing dictatorship regime. The wealthier they are, the bigger the threat. By creating a housing crisis, most billionaires would fall back to being millionaires.
Second, policy inaction could result in a sharper cliff fall, which might end the crisis sooner rather than later. However, this runs a high risk of being overdone because most crises tend to be uncontrollable once started. This is obviously realized in China.
A third but intuitive reason is the standard bad consequences of excess money creation. China did this experiment in the 1940s. The massive money printing led to hyperinflation, which collapsed the currency and, finally, the political regime. The existing ruling regime knows such history well. To maximize their political interests, they would prefer the collapse of the economy via prolonged depression than the collapse of the currency by the latter (but not necessarily for the former) could collapse the political regime.
How likely is this to be true? Money creation has been conducted in many countries like the U.S. and Japan many times without resulting in the collapse of anything.
China is as big as these two countries; one might wonder if there would be the same kind of immunization from hyperinflation or currency collapse after the massive scale of money creation. In fact, they experimented with this in 2009, when M2 expanded at a nearly 30 percent year-over-year (YoY) rate. It turns out there was no pressure for depreciation, but inflation pushed to over 6 percent after two years.
In recent years, the opposite happened. Since 2018, there have been two rounds of monetary expansion where M2 YoY growth reached double digits. The resulting impact was not inflation but deflation due to the debt crisis, yet accompanied by currency depreciation. To see this, the accompanying chart compares the China-U.S. M2 YoY growth gap with the USD and CNY. As China’s M2 growth had exceeded that of the U.S., depreciation would happen after about a year. This shows that excess money creation is really a threat to currency value, as recently experimented.
China-US M2 YoY Gap and USD/CNY(Courtesy of Law Ka-chung)
The only tactic remaining was to print excess money in a relatively ordered manner, letting the currency depreciate gradually, even in the face of a series of defaults resulting in a severe recession. One day, they might devalue the currency sharply, but the uncertainty of doing so is very high.
X To Host Town Halls With Trump, RFK Jr. As CNN Announces Commercial Breaks For Biden Debate
Former President Donald Trump and independent presidential hopeful Robert F. Kennedy Jr. will participate in live town halls hosted by X and cable news network NewsNation, Axios reports.
The events have yet to be scheduled, nor moderators picked – however, X users will be able to ask questions of the candidates during the events, called “The People’s Town Hall,” according to the report.
The Biden campaign has declined to participate.
In a Wednesday evening appearance on News Nation, Kennedy confirmed his plans to participate, adding that X owner Elon Musk offered use of his platform.
The moderators, which will likely include at least one NewsNation host, will have final say over the questions asked.
Axios reports that X CEO Linda Yaccarino approached NewsNation parent Nextar with the idea.
NewsNation notably hosted the fourth GOP presidential primary debate last December, which was watched by over 4 million people across NewsNation and sister network CW.
Biden Catches Break(s)
Meanwhile, Biden and Trump have agreed to a June 27 debate hosted by CNN – over which RFK Jr. has filed a FEC complaint over the criteria required to participate.
On Thursday, CNN announced that it plans to run commercials during the event – which has been ad-free for many years under the management of the non-partisan Commission on Presidential Debates, Variety reports.
CNN’s plan to include commercials was noted in rules for access that were recently issued to members of the DC Television News Pool and subscribers of its feed as well as to CNN’s affiliates. What’s more, networks will have the option of selling their own commercials instead of running the ones that air on CNN. CNN has yet to offer information about how many ad breaks the debate will contain and how long they will be, according to one of these people.
Last weekTrump announced during a rally in the Bronx that one of his conditions for debating will be that they stand up.
“Today they said, ‘We’d like to set up tables so you sit down.’ I said, ‘I don’t want to sit down for a debate. Let’s go,'” Trump told the crowd. “So we’re not sitting down. We’re gonna be standing up for the debate.”
“If crooked Joe Biden makes it through the debate, which I think he will, [the media are] going to say it was one of the great debate performances in history,” Trump added.
By Bas van Geffen, Senior Macro Strategist at Rabobank
Trump has been found guilty of all charges in his hush money trial. While this may prevent Trump from voting for himself in November, it is questionable if this conviction will meaningfully lower his odds in the Presidential elections. In fact, as my colleague noted yesterday, perhaps the opposite is more likely. Trump may gain huge publicity and can claim to be the victim of political ‘lawfare’. Indeed, in the hours after the guilty verdict, the large inflow of new donors crashed the website for donations to Trump’s campaign.
Recall that our US strategist has assumed a Trump victory as the base scenario for our outlook beyond this year. And, taking Trump’s threats of universal tariffs seriously, that would further accelerate the trend towards protectionism and bifurcation of global trade that is currently ongoing:
China has just restricted the exports of certain components and technologies used in the aviation and aerospace sectors;
China has threatened “richer and more powerful countermeasures” if the US carries on endangering China’s sovereignty and security interest; and
the European Commission’s probe into Chinese EVs is drawing to a close, although a decision on punitive import duties may be delayed until after the European Parliament elections.
If and when Europe imposes such tariffs, expect China to respond in kind.
Such anti-dumping probes and countermeasures may only become more prevalent. Chinese data released overnight highlighted the risk that China’s domestic challenges may have global repercussions.
China’s manufacturing PMI raised a few eyebrows, particularly considering that Chinese authorities have been trying to invigorate growth by encouraging companies to renew equipment with tax-breaks and subsidized loans, and investment spending by state agencies. Despite these policies, the manufacturing index for May slipped back below the neutral mark. The index fell to 49.5; a full point below the consensus estimate. New (export) orders were especially weak. Notably, there was a clear distinction between large, medium and small enterprises. The latter group saw weaker activity whilst the large companies (which are more likely to be state-led) actually reported a slight improvement.
These observations point at weaker-than-expected growth of Chinese domestic demand despite measures to increase supply. On the one hand, this obviously raises the risk of renewed deflationary pressures – which may also have a global impact if China seeks to sell more of its oversupply abroad. But in our view the biggest risk is actually that a widening imbalance between demand and supply in China would spur more protectionist measures in the US and Europe to prevent this rising overcapacity from reaching Western shores in the first place.
We’re not the only ones concerned by this. According to a recent survey by the European Round Table for Industry, 54% of European companies and 77% of Chinese CEOs indicate that China’s industrial overcapacity will remain the biggest point of friction between China and the EU.
Such protectionist measures are strictly necessary to rebuild critical European manufacturing capacity, but they may also keep inflation elevated in the short- to medium-term. Recall that goods prices have been the main driver of European disinflation to date.
German HICP inflation accelerated sharply this week, from 2.4% to 2.8%. Part of this acceleration had been anticipated, since April data were artificially lower due to the timing of Easter. On top of this, higher energy prices drove up the inflationary impulse from energy-related costs, as did higher services inflation. The latter follows last week’s report that German negotiated wages increased sharply.
The ECB was quick to downplay the latest wage data with a blog post to “put these in perspective.” We agree with their assessment that part of this acceleration was due to catch-up effects and one-offs, but the ECB’s new wage tracker still indicates wage growth trending between 3.5% to 4.5% this year. That does leave the question to what extent businesses can and will pass these costs on to end users.
Yesterday’s release of the Eurozone business confidence surveys may encourage policymakers somewhat: although employers expect higher selling prices in the coming months, the expected rate of price hikes continues to trend lower. This suggests that companies are absorbing some of the higher costs in their margins.
That said, resilient consumer demand could still change this picture. French and German consumer spending data for April underscored that retail sales will not recover without some bumps. French consumer spending fell 0.8% m/m whilst German retail sales fell 1.2% m/m, although the March figure was revised up significantly to 2.6%. Despite weak consumer demand in April, the outlook continues to brighten due to the recovery in real wages and good job prospects. Yesterday, Eurostat reported the lowest unemployment rate ever recorded since the advent of the euro.
Chicago PMI Unexpectedly Craters To Depression Levels
After unexpectedly slumping last month to 37.9, the Chicago PMI index cratered even more unexpectedly in May, when it defied hopes of a rebound to 41.5, and instead tumbled even more, sliding to a cycle low of 35.4 which was not only below the lowest estimate, but was staggeringly low. To get a sense of just how low, the last two times it printed here was during the peak of the covid and global financial crises…
… which seems to suggest that at least according to Chicago-based purchasing managers, the economy is in a depression.
This is how the final number looked relative to expectations.
Looking at the report we find the following:
Business barometer fell at a faster pace; signaling contraction
New orders fell at a faster pace; signaling contraction
Employment fell at a faster pace; signaling contraction
Inventories fell at a faster pace; signaling contraction
Supplier deliveries fell at a slower pace; signaling contraction
Production fell at a slower pace; signaling contraction
Order backlogs fell at a faster pace; signaling contraction
Did nothing rise? One thing did:
Prices paid rose at a slower pace; signaling expansion
So we have not just a depression, but a stagflationary depression in which everything else is going to hell, except prices: they keep on rising.
And while it is unclear what has prompted this unprecedented bearishness (the surely negative contribution from Boeing is likely to blame for a substantial portion of the apocalyptic outlook), one thing is certain: Goldman will have to come up with even more goalseeked surveys that explain away reality and tell us how purchasing managers really should feel…
… if only they knew just how great Bidenomics was for them.
