Month: June 2024

The number of Americans filing for jobless benefits for the first time dipped from a revised 239k to 233k last week…

Source: Bloomberg

However, continuing claims for jobless benefits continues to rise – hitting its highest since November 2021 at 1.839mm Americans – and the overall trend in initial claims is clearly heading higher…

Source: Bloomberg

Is this data bad enough to warrant immediate rate-cuts?

Source: Bloomberg

We suspect there’s a long way to go before we reach reality.

US index futures are down but well off session lows as Treasury yields stay at a two week high high this morning ahead of a flurry of economic data over the next two days which will help set the path for Fed policy. At 8:00am ET, S&P futures were down 0.1% as ugly earnings from Walgreens confirmed the consumer weakness is spreading, while Nasdaq futures dropped 0.2% after Micron’s disappointing sales forecast weighed on tech giants. Semis are mostly lower post MU’s earning as hedge funds continue to dump TMT/semi names to retail investors: NVDA -1.1%, AMD -47bp, QCOM -40bp. MU is down -5.4% pre-market, partially recovered from the initial 7% loss. Bond yields are flat while the USD is modestly lower. Commodities are mostly higher led by oil complex, ags and precious metals. Today, the key macro catalysts are Jobless Claims, Durable/Cap Goods Orders and the first presidential debate tonight, while tomorrow we get the closely watched core PCE figures. The figures come after Fed Governor Michelle Bowman yesterday tempered market expectations for interest rate cuts. We also receive WBA and NKE earnings.

In premarket trading, Micron slipped 5% after the largest US maker of computer memory chips provided a forecast that disappointed investors seeking a bigger payoff from artificial intelligence mania. Micron’s underwhelming outlook highlighted the risks of relying on artificial intelligence chip makers to fuel the stock rally. The shares slumped as much as 8% in premarket trading, dragging down a number of megacap tech peers including Nvidia (-1.1%), AMD (-47bp) and QCOM (-40bp). Walgreens Boots Alliance fell 12% after the drugstore chain cut its profit forecast for the full year, citing a “worse-than-expected” consumer environment. Here are some other notable premarket movers:

• BlackBerry (BB) advances 9% after the security software company reported first-quarter revenue that came ahead of estimates.
• International Paper (IP) shares plunged 14% after Suzano SA ended its pursuit of the US paper and packaging company. That clears the way for International Paper to acquire UK rival DS Smith Plc, whose shares soared in London. 
• Levi Strauss (LEVI) drops 15% after the company reported sales in its latest quarter that slightly missed expectations, underscoring Wall Street’s high expectations for the company.

Reports on economic growth and weekly unemployment claims are on traders’ radar Thursday before tomorrow’s key inflation figures, after Fed Governor Michelle Bowman tempered market expectations for interest rate cuts. Treasury yields held yesterday’s rise and a gauge of the dollar hovered near an eight-month high.

“It’s all about the Fed — higher for longer is keeping the front end of rates very high, drawing money into the US and keeping the dollar strong,” said Andrew Brenner, head of international fixed income at NatAlliance Securities LLC.

June has been a volatile month for Big Tech stocks after the meteoric rise of Nvidia, Microsoft, Amazon, Meta and Apple accounted for well over half of the 15% advance in the S&P 500 this year.

Micron is among the companies that have gotten a lift from the mania for AI-related stocks, with its shares more than doubling in the year prior to its Wednesday report. But even with an outlook roughly in line with the average of analyst estimates, it was punished for not outperforming elevated expectations.

In another sign of investor concern about market concentration, we first reported that hedge funds “aggressively” sold tech stocks in June – the month in which Nvidia briefly became the world’s largest company – to retail investors. Semiconductor and semiconductor equipment stocks were the ones offloaded the most, according an analysis by Goldman Sachs Group Inc.

Europe’s stock benchmark dropped for a third day, with traders in holding mode ahead of Sunday’s French elections. The Stoxx Europe 600 index extended its decline after ECB Governing Council member Martins Kazaks said strong wage growth was standing in the way of faster rate reductions. Data earlier showed money supply in the euro region rose faster than expected in May, fueled by credit growth. Retailers are the worst performers on the Stoxx 600 as H&M tumbled 14% after it reported a slump in sales and said meeting a key profitability target had become tougher. GSK fell after US health officials delivered a fresh regulatory blow to its blockbuster RSV vaccine. Gucci owner Kering gained after a double-upgrade from Bank of America Corp. Here are all the notable European movers:

• Chip-equipment stocks are broadly higher in early trading after US memory chipmaker Micron forecast a material increase in capital spending for its fiscal year 2025.
• Serco shares gain as much as 5.9% after the UK outsourcing solutions company upped its guidance for full-year operating profit, based on solid performance in the first half.
• Kering shares rise as much as 4.8%, in sixth straight day of gains, after BofA double-upgrades to buy from underperform based on signs of better brand heat for the luxury group’s key Gucci label.
• DS Smith shares climb as much as 7.4% after Brazil’s Suzano ended its pursuit of International Paper, removing a complication to the US company’s plan to acquire its UK peer.
• Safran shares advance as much as 2.2% following an upgrade to buy at Citi, which says the aircraft supplier’s medium-term outlook continues to be “exceptionally strong.”
• Bunzl shares rise as much as 2.1% after analysts welcome the British distribution company’s increased full-year guidance as the benefits of acquisitions take effect.
• Watches of Switzerland shares surge as much as 8.4%  after the luxury watch retailer’s earnings beat expectations and the company reiterated its outlook, which reassured investors.
• OVH shares jump the most since the cloud-services company’s 2021 IPO after announcing third-quarter results which were “better then feared,” according to Morgan Stanley.
• H&M shares slump as much as 15%, the steepest intraday decline since December 2017, after the clothing retailer’s second-quarter operating profit missed consensus estimates.
• GSK shares drop as much as 7.2% to the lowest since Jan. 2 after US health officials recommended restricting vaccination with its RSV shot to people who are older and more at risk.
• Salmar shares fall as much as 3.9%, hitting its lowest this year, as Nordea sets a Street-low target and says the Norwegian salmon farmer’s valuation is “on the rich side.”
• Currys shares slide as much as 7.2%, its steepest drop since March, after the UK electronics retailer reported FY24 results.

Earlier, Asian stocks dropped for the first time in three days, as sentiment in China soured with a major benchmark teetering on technical correction. Tech shares also dragged following declines in US peers.  The MSCI Asia Pacific Index fell as much as 0.7%. Along with Chinese megacaps, chip stocks were some of the biggest drags after Micron Technology’s underwhelming outlook. Benchmarks in Hong Kong posted the biggest contractions in the region, while the markets in Japan, mainland China and South Korea also fell. A key Chinese stock gauge is poised for a technical correction — after falling on Thursday and taking declines from a May 20 high to about 10% intraday — as investors struggled to find catalysts ahead of a meeting of the nation’s top leaders next month. Beijing’s new measures to ease homebuying requirements did little to lift concerns about the nation’s tepid economic recovery.

In FX, the yen is up 0.2% against the greenback, taking USD/JPY down to ~160.50 after another warning from the Japanese Finance Minister. The yen pared some of the declines seen Wednesday after tumbling to 160.87 per dollar, the weakest level since 1986. The Swedish krona is the weakest of the G-10 currencies, falling 0.2% against the dollar, after the Riksbank signaled it may cut interest rates as many as three more times this year.

In rates, treasuries are little changed on the day, with overnight price action within a narrow range leaving yields within one basis point of Wednesday’s close. Core European rates underperform slightly vs. Treasuries. US 10-year yields trade around 4.33%, near Wednesday’s closing levels, with bunds and gilts lagging by additional 1.5bp and 2.5bp in the sector. Treasury spreads are steady, largely holding Wednesday’s steepening move.  The focus for the US session includes a heavy data slate headed by GDP and durable goods orders alongside weekly jobless claims, while this week’s coupon auctions conclude with $44b 7-year notes. Treasury coupon issuance concludes with a $44b 7-year note sale at 1pm New York time following decent results from both 2- and 5-year auctions so far this week. The WI 7-year — at roughly 4.32% — is 33bp richer than May’s stop-out, which tailed the WI by 1.3bp

In commodities, oil prices advance, with WTI rising 0.9% to trade near $81.60 a barrel. Spot gold rises $15 to around $2,313/oz.

Bitcoin is flat and holds around USD 61k while Ethereum is incrementally softer and sits just below USD 3.4k.

Looking at today’s calendar, the US economic data slate includes 1Q final GDP release, May’s advanced goods trade balance, wholesale inventories, durable goods orders, initial jobless claims (8:30am), May pending home sales (10am) and June Kansas City Fed manufacturing activity (11am). No Fed speakers are scheduled for the session; Barkin, Bowman and Daly are due Friday

Market Snapshot

• S&P 500 futures down 0.2% to 5,530.50
• STOXX Europe 600 little changed at 514.53
• MXAP down 0.5% to 179.73
• MXAPJ down 0.5% to 564.62
• Nikkei down 0.8% to 39,341.54
• Topix down 0.3% to 2,793.70
• Hang Seng Index down 2.1% to 17,716.47
• Shanghai Composite down 0.9% to 2,945.85
• Sensex up 0.4% to 79,015.40
• Australia S&P/ASX 200 down 0.3% to 7,759.60
• Kospi down 0.3% to 2,784.06
• German 10Y yield +2bps at 2.47%
• Euro little changed at $1.0685
• Brent Futures up 0.5% to $85.67/bbl
• Gold spot up 0.2% to $2,303.70
• US Dollar Index little changed at 106.01

Top Overnight News

• Trump opens a large lead in the latest NYT poll (up 4 points among likely and 6 points among registered voters) while Quinnipiac has him up 4 points (and up 6 points when 3rd parties are included) and the Washington Post notes he’s ahead in 5 of the 7 important battleground states. NYT / WAPO  
• MU -8% pre mkt as co beat on EPS/revenue, but free cash flow came in light and the guidance was only inline while the F25 capex outlook is very high. RTRS
• Beijing became the last major Chinese city to trim mortgage rates and down-payment requirements for home buyers, part of growing efforts across the country to resolve a long-running property crisis. Authorities in China’s capital said late Wednesday that they will reduce minimum down-payment ratios for first-time buyers to 20% from 30% and for second homes to 30% and 35% from 40% and 50%, respectively, depending on location. They also lowered the commercial mortgage rate by up to 55 basis points. WSJ
• The era of big paychecks for Chinese financiers is fast coming to an end as some of the industry’s biggest companies impose strict new limits to comply with President Xi Jinping’s “common prosperity” campaign. The nation’s largest financial conglomerates have asked senior staff to forgo deferred bonuses and in some cases return pay from previous years to comply with a pre-tax cap of 2.9 million yuan ($400,000). BBG
• Japanese authorities will take necessary actions on currencies, Finance Minister Shunichi Suzuki said on Thursday, signaling readiness to intervene in the exchange-rate market after the yen’s slide to a fresh 38-year low against the dollar. “It’s desirable for exchange rates to move stably. Rapid, one-sided moves are undesirable. In particular, we’re deeply concerned about the effect on the economy,” Suzuki told reporters. RTRS
• NATO will offer Ukraine a new headquarters to manage its military assistance at its upcoming 75th anniversary summit in Washington, officials said, an assurance of the alliance’s long-term commitment to the country’s security that has been heralded as a “bridge” to Kyiv’s eventual membership. NYT
• Evidence is growing that Russia is building a ghost fleet to ship LNG around the world, as it did for oil, transferring ownership of at least eight vessels to little-known companies in Dubai. The ships may help Moscow bypass curbs and fund its war machine. BBG
• An attempted coup in Bolivia was subdued after just three hours and former General Juan Jose Zuniga, who led rebel troops in storming the presidential palace, was arrested. BBG
• UBS will create a new unit in its global wealth management arm, to be headed by former Credit Suisse banker Yves-Alain Sommerhalder. JPMorgan veteran Michael Camacho will head wealth management in the US as part of the push. BBG

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were negative amid this week’s choppy tech performance with headwinds from higher yields. ASX 200 was pressured with real estate leading the declines amid higher yields and firmer inflation expectations. Nikkei 225 failed to benefit from stronger-than-expected retail sales with the mood dampened amid rate hike bets for the BoJ’s July meeting. Hang Seng and Shanghai Comp. traded lower with underperformance in Hong Kong amid pressure in tech and consumer stocks, while the mainland was also pressured as China’s financial industry elites face USD 400k pay caps and bonus clawbacks under President Xi’s “common prosperity” campaign.

Top Asian News

• Some bond market participants who met with the BoJ this month, called on the bank to trim bond purchases in several stages to enhance market liquidity, according to minutes of the meeting cited by Reuters.
• BoJ Deputy Governor Uchida said weak JPY is upward factor for prices, closely monitoring in conducting monpol.
• Japanese Government says economy in moderate recovery although it appears to be pausing recently, maintaining the same view for 5 months; warns on risks of elevated interest rates in the West affecting the weak Yen.
• China’s financial elite reportedly face USD 400k pay caps and bonus clawbacks as some of the industry’s biggest companies impose strict new limits to comply with President Xi’s “common prosperity” campaign, according to Bloomberg.
• Japanese Finance Minister Suzuki said won’t comment on FX levels and that FX stability is desirable, while he is watching FX moves with a high sense of urgency and is deeply concerned about the FX impact on the economy. Furthermore, Suzuki said they will take necessary actions on FX, as well as noted that rapid and one-sided moves are undesirable.
• Japanese Chief Cabinet Secretary Hayashi won’t comment on forex levels and potential FX intervention but said they will take appropriate steps on excessive FX moves and it is important for currencies to move in a stable manner reflecting fundamentals, while he added that rapid FX moves are undesirable.
• S&P China rating affirmed at A+/A-1; outlook stable; says ratings on China reflect country’s policy settings that will likely maintain robust economic growth and strong external metrics

European bourses, Stoxx 600 (U/C), are mixed in what has been a lacklustre and rangebound session thus far. European sectors are mixed, with Energy taking the top spot, benefiting from broader strength within the underlying crude complex. To the downside, Retail slumped after H&M (-11%) reported a miss across its results. US Equity Futures (ES -0.2%, NQ -0.3%, RTY -0.2%) are modestly softer across the board, with sentiment slightly more subdued than peers in Europe.

Top European News

• ECB’s Kazimir says “I expect a quiet summer on ECB rates”; can expect one more rate cut this year.
• UK Labour Party secured a fresh letter of support from business leaders backing plans to overhaul the “apprenticeship levy” if the party wins next week’s UK general election, according to FT.
• BoE Financial Stability Report (June): Risks to the UK financial system are broadly unchanged since Q1. But some asset prices have continued to rise and the risk of a sharp correction persists.
• Riksbank maintains its Rate at 3.75% as expected; if inflation prospects remain the same, the policy rate can be cut two or three times during H2’24. 

FX

• DXY is steady around the 106 mark ahead of today’s US data points, which could ignite some price action for the USD; though, much of the focus will be on US PCE on Friday.
• EUR/USD is stuck on a 1.06 handle after making a new monthly low on Wednesday at 1.0666, it can be noted there is a lot of option activity for the pair due to roll off at the NY fix.
• GBP is a touch firmer vs. USD and EUR. UK-specific newsflow remains light ahead of next week’s general election. Cable remains around recent lows with technicians noting that the 50 and 100DMAs at 1.2639 and 1.2640 have now flipped to resistance.
• JPY is marginally firmer vs. the USD but price action is limited compared to yesterday’s moves which sent the pair to a 38 year high of 160.87; currently sitting around 160.50.
• Antipodeans are both modestly outperforming vs the Dollar, with the Aussie slightly more in a contamination of the post-CPI strength. AUD/USD has risen to a 0.6672 peak with yesterday’s high at 0.6688.
• SEK is softer vs. peers after a dovish tweak to forward guidance from the Riksbank alongside their decision to stand pat on rates.
• PBoC set USD/CNY mid-point at 7.1270 vs exp. 7.2765 (prev. 7.1248).

Fixed Income

• USTs are down to a 109-28 base with the benchmark on a gradual downward path once the fleeting upside from Wednesday’s strong 5yr sale dissipated; 7yr tap this evening. Overnight, Treasuries came under pressure alongside a move lower in JGBs as the latter extended below 143.00 to a 142.58 base.
• An incrementally softer start with Bunds losing the 132.00 handle between the close & open, seemingly following JGBs & USTs at the time, and have since slipped slightly further to a 131.68 WTD base.
• Gilts are the modest underperformer, having opened near the prior day’s worst, before extending lower to a 97.93 base; As for the election, the final TV debate added little with polls cementing on a convincing Labour victory.
• Italy sells EUR 7.0bln vs exp. 6.0-7.0bln 3.35% 2029 & 3.85% 2034 BTP and EUR 1.75bln vs exp. EUR 1.25-1.75bln 2032 CCTeu

Commodities

• Crude benchmarks have bounced in the European morning after a contained APAC session but remain within the confines of Wednesday’s relatively choppy trade. Brent Aug currently just shy of USD 86/bbl.
• Precious metals are slightly firmer given the tepid tone and softer dollar. However, the yellow metal is stuck at the USD 2300/oz mark after losing the figure on Wednesday and slipping to a USD 2293/oz base.
• Base metals are modestly in the red in-fitting with the broader risk tone. Specifics have been relatively sparse with overall macro developments somewhat light thus far.
• Ilsky Refinery in Russia works in normal mode, via Interfax.

Geopolitics: Middle East

• Israeli Cabinet member Dichter says “We are preparing for all possibilities in the north and we will go to war when the time comes”, via AJA Breaking
• Israeli Defence Minister Gallant said after meeting with US National Security Adviser Sullivan that significant progress has been made on the issue of the equipping and armaments that Israel needs.
• Israeli Defence Minister Gallant said Israel does not want a war in Lebanon and prefers a diplomatic solution, but cannot accept Hezbollah ‘military formations’ on its border, while he warned that Israel’s military is capable of taking Lebanon ‘back to the Stone Age’ but added that they don’t want to do that. Furthermore, Gallant reaffirmed Israel’s commitment to a ceasefire-hostages deal laid out by US President Biden and discussed with US officials ‘Day After’ proposals for post-war Gaza.
• Israel and the US are concerned that Iran will try to develop its nuclear technology including weapons efforts in the weeks leading up to the US presidential election, according to officials cited by Axios.
• Israeli warplane fired 2 air-to-surface missiles at a two-story building which caused the building to collapse and damaged surrounding structures, while at least 5 civilians were injured by the Israeli airstrikes on the building in Lebanon’s Nabatieh, according to Xinhua.
• Syrian state TV reported explosions from an Israeli airstrike on the capital of Damascus.

Geopolitics: Other

• North Korea said it successfully conducted an important test in advancing missile technology with the test aimed at developing a multiple warhead missile, according to KCNA. However, it was later reported that the South Korean military said North Korea’s claim of a successful missile test on Wednesday is a deception and exaggeration.
• Russian Deputy Foreign Minister says western politicians will not be able to shelter in bunkers if it comes to a nuclear conflict, via Tass. Russia could amend the nuclear doctrine in the future, accounting for Ukraine experiences. Already taking measures in response to the US involvement in strikes on Sevastopol.

US Event Calendar

• 08:30: 1Q GDP Annualized QoQ, est. 1.4%, prior 1.3%
  • 1Q GDP Price Index, est. 3.0%, prior 3.0%
  • 1Q Personal Consumption, est. 2.0%, prior 2.0%
  • 1Q Core PCE Price Index QoQ, est. 3.6%, prior 3.6%
• 08:30: May Durable Goods Orders, est. -0.5%, prior 0.6%
  • May Durables-Less Transportation, est. 0.2%, prior 0.4%
  • May Cap Goods Ship Nondef Ex Air, est. 0.2%, prior 0.4%
  • May Cap Goods Orders Nondef Ex Air, est. 0.1%, prior 0.2%
• 08:30: May Retail Inventories MoM, est. 0.3%, prior 0.7%
  • May Wholesale Inventories MoM, est. 0.1%, prior 0.1%
• 08:30: May Advance Goods Trade Balance, est. -$96b, prior -$99.4b, revised -$98b
• 08:30: June Initial Jobless Claims, est. 235,000, prior 238,000
  • June Continuing Claims, est. 1.83m, prior 1.83m
• 10:00: May Pending Home Sales YoY, est. -4.6%, prior -0.8%
• 10:00: May Pending Home Sales (MoM), est. 0.5%, prior -7.7%
• 11:00: June Kansas City Fed Manf. Activity, est. -5, prior -2

DB’s Jim Reid concludes the overnight wrap

Markets have struggled over the last 24 hours, with sovereign bonds selling off and equities losing ground for the most part. To be fair, it wasn’t all bad news, and a renewed tech advance did see the Magnificent 7 (+1.60%) reach a new all-time high. But otherwise, a cautious tone was set from the outset, as the upside surprise in Australia’s CPI on Wednesday morning meant investors started to dial back the chance of rate cuts over the coming months. Other economic data also surprised on the downside, and after the US close, Micron fell by around -8% in after-hours trading as investors were disappointed by its forecasts, and futures on the S&P 500 are down -0.33% this morning. Alongside that, markets are still attuned to several political events, including the first round of the French legislative election on Sunday. So there’s multiple risks that investors are thinking about right now, which is making it difficult for markets to gain momentum.

We’ll start with the sovereign bond selloff, since that’s been the clearest move over the last 24 hours, and came as investors became increasingly conscious about inflationary risks. Indeed, this week has already seen upside inflation surprises from Canada and Australia, and we’ve still got the US PCE numbers tomorrow, as well as some of the flash CPI prints for June from Euro Area members. In turn, that’s seen investors price out the chance of rate cuts, and the amount priced in by the Fed’s December meeting fell by -3.3bps on the day to 43bps. The effects were particularly evident in pricing for the Reserve Bank of Australia, where the chance of a hike at the next meeting in August surged to 34% after the CPI release there, having been priced at just 1% on the previous day’s close.

With investors pricing in a more hawkish stance of policy, that meant yields rose on both sides of the Atlantic. Significantly, it meant that French 10yr yields (+6.5bps) were up to 3.23%, which is their highest closing level since November, and the Franco-German spread also widened again to 78bps (having stayed in the 75-80bps range for nearly two weeks now). Elsewhere in Europe, there was also a rise in yields, with those on 10yr bunds (+4.3bps), BTPs (+6.9bps) and gilts (+5.3bps) all moving higher as well. Meanwhile in the US, the 10yr Treasury yield (+8.1bps) rose to 4.33%, its highest level in two weeks. Treasury yields did see some stabilisation after a decent 5yr auction but still ended the day around the session highs. And with higher yields and the mostly risk-off tone, the broad dollar index rose +0.42% to its highest level since the end of April.

When it came to equities, the S&P 500 advanced +0.16%, leaving it within 0.2% of last week’s all-time high. But in reality it was another divergent performance between megacaps and the small caps. The Magnificent 7 (+1.58%) hit another all-time high, with Amazon closing above a $2tn market cap for the first time. But at the other end, the small-cap Russell 2000 (-0.21%) lost ground for a second day running. So even as the S&P 500 saw little change, the equal-weighted version of the index underperformed once again with a -0.36% decline, with energy (-0.86%) and financials (-0.47%) leading on the downside. That weakness was evident in Europe as well, where the STOXX 600 (-0.56%), the CAC 40 (-0.69%) and the DAX (-0.12%) all lost ground.

Overnight in Asia, the main story has been the weakness in the Japanese Yen, which closed beneath the 160 mark yesterday at 160.81 per US dollar. That is its weakest closing level since 1986 and means it’s now weaker than its levels earlier in the year that saw the authorities intervene. Yesterday saw Finance Minister Kanda say that “I have serious concern about the recent rapid weakening of the yen and we are closely monitoring market trends with a high sense of urgency”. He also said that “We will take necessary actions against any excessive movements”. This morning trading, the yen has slightly strengthened again to 160.39 per US dollar as we go to print.

Otherwise in Asia, the main story has been of further losses overnight, with declines for the Nikkei (-1.08%), the Hang Seng (-2.04%), the Shanghai Comp (-0.51%), the CSI 30 (-0.41%) and the KOSPI (-0.49%). In terms of data overnight, Japanese retail sales were up +1.7% in May (vs. +0.8% expected), and in China, industrial profits were up +0.7% in May on a year-on-year basis.

Looking forward, there’s plenty happening in the political sphere today, and tonight will see the first presidential debate of the US election, as Joe Biden and Donald Trump meet tonight at 9pm Eastern Time. Over in Europe, there’s also an EU leaders summit taking place today, at which they are expected to sign off on some of the EU’s most senior positions following the parliamentary election. And in France, there’s just three days until the first round of the legislative election on Sunday, and an Ifop poll found that Marine Le Pen’s National Rally remained ahead on 36%, with the left-wing alliance behind them on 28.5%, and President Macron’s centrist group on 21%.

Finally, there wasn’t much economic data yesterday, although US new home sales fell to an annualised rate of 619k in May (vs. 633k expected), which is their lowest level in 6 months. In Germany, the GfK consumer confidence unexpectedly declined to -21.8 (vs -19.5 expected) having risen for the four previous months.

To the day ahead now, and data releases from the US include the weekly initial jobless claims, preliminary durable goods orders for May, pending home sales for May, and the third estimate of Q2 GDP. Meanwhile in Europe, there’s the Euro Area M3 money supply for May. From central banks, we’ll hear from the ECB’s Muller and Kazimir, and the Bank of England will release their Financial Stability Report. Finally in the political sphere, EU leaders will be meet in Brussels for a summit, and a US election debate will take place between Joe Biden and Donald Trump.

Authored by Jeffrey A. Tucker via The Epoch Times (emphasis ours),

There’s some bad news for those hoping for a fix to the housing market. There are signs that the squeeze is going to get worse.

If you cannot think of buying a new house right now, it’s going to be harder in the future. If you are hoping to sell, it’s a great time to do so, but then you have a problem: You need to live somewhere. That’s why so many people today are frozen in place, unable to even consider moving for a better job because it means giving up a locked-in low rate for a sky-high new rate in the midst of a price explosion.

That’s if you can even find a house on the market. Both housing starts and new building permits fell off the cliff in May (down by 5.5 percent in starts and 3.8 in permits month over month), and the previous month’s data was revised downward. This means we’ve faced three months of falling trends in both areas that constitute all new supply for housing. There are no signs of improvement.

That’s the supply side. The demand side pushes in the opposite direction with well-heeled buyers in constant bidding wars with cash buyers for anything that comes on the market. The big institutions are in the market in a way never before seen, with a familiar pattern of house-flipping done by major investment houses.

The single most useful tool in economics theory is the idea of supply and demand as the basis of price. The model was described as early as the 16th century and became conventional analytics only in the 19th century. The socialists of the time never accepted supply and demand, oddly enough. In fact, supply and demand is all we need to understand why all this is happening: intense demand on the buyers’ side, and restriction on the supply side. We are at lower levels of new construction in the post-lockdown period.

The result is far beyond anything we ever saw in 2008. If that was a bubble, there are no words for what is going on right now.

The demand side of the market is facing an issue we’ve never seen before. The inflation in insurance premiums is making it unaffordable for many people, with anecdotal reports of doubling and tripling prices. With a mortgage, you absolutely must carry insurance as a matter of contract, same as with car insurance.

If you can’t afford the insurance, you must sell to a cash buyer who doesn’t have to have it.

Why precisely is this happening? Of course, it’s a perfect opportunity for major media to cite this as an effect of “climate change,” but there is actually no evidence I’ve seen that this is true. The actual and full culprit here is really the depreciation of the currency in terms of goods and services, plus the rising costs of all repairs of anything and everything.

Insurance premiums are upstream of all the costs associated with rebuilding, repair, cleanup, reconstruction, and all the materials associated with that. The companies aren’t being greedy; they are simply responding to the metrics reported by their own actuaries. They ask the question “What is the risk that this house could go up in flames or otherwise face weather-related damage relative to the expense associated with fixing it after?” They are coming up with crazy figures on the cost side of some disaster, which is due to worker shortages, skills deprecation, and inflation of all materials.

In addition, with the increase in housing prices, replacement costs rise in tandem, so, of course, insurance prices go up, too.

In other words, the insurance premiums are merely reporting on the metrics downstream from events against which they are insuring. The numbers are shocking because all official data is massively underreporting inflation. Insurance premiums are merely reflecting the inflationary reality under the surface of the rah-rah media reports.

Something similar is happening to car insurance. Electric vehicles are hugely expensive to repair, and it’s the same with hybrids. But the entire market for car repairs faced a blow with lockdowns, from which it hasn’t recovered. Supply chains became a snarled-up mess with lots of bankruptcies and disruptions, and the labor market for repair experienced an exodus of workers who moved on to other industries or simply left town.

Get this. Do you know what isn’t included in the consumer price index (CPI)? Car and home insurance. They are simply not part of the measured basket. The CPI also excludes home prices, replacing them with a proxy called owners’ equivalent rent, which is not a reflection of reality. It also uses a crazy metric to assess health insurance such that an increase can be rendered as a decrease. In addition, the CPI can’t measure added fees and shrinkflation.

The result is that the CPI has become pure fantasy at this point. Anything happening in the housing market, from interest to insurance to prices themselves, is simply not included. Once we do include them, you can generate numbers that are easily in the double digits. Including house prices alone (excluded as of 1983) takes current numbers from 3.5 percent to 6 percent. Throwing in interest and insurance and more gets us very easily to double digits for fully two years.

The more you think about the statistical razzle-dazzle here, the more you gain a picture of the worst three years of inflation since the Civil and Revolutionary Wars. Try as we might, there is no firm number we can put on it. This is what accounts for the sinking expectations of consumers and producers, and the down-in-the-mouth attitudes of everyone toward their economic and financial plight.

This whole picture is worsened by the extremely spooky refusal of official and media culture to report on the realities with any degree of honesty or sophistication. I’ve written now for two years that my intuition is that we never left the recession of March 2020. Recessions are usually measured as a decline for two successive quarters of inflation-adjusted output as captured by the gross domestic product (GDP).

There are two major problems. The GDP numbers are disguised by the inclusion of government spending and debt as contributors to growth. But making matters even worse, the inflation adjustment to that big number uses what’s called personal consumption expenditures, which underestimate inflation even more than the CPI. Once you add in a realistic inflation number, you end up with no positive returns on the GDP for the past three years.

In other words, we very well could be in the midst of an unreported inflationary depression. Actually, correct that: a global inflationary depression.

Wouldn’t that be something if such a thing were happening right now and it never entered the headlines? That’s what statistical trickery will do.

The mess of the housing market today is only the most conspicuous indicator of this. The beneficiaries are Invitation Homes, American Homes 4 Rent, and Yieldstreet, directly, and BlackRock and Fidelity indirectly. Does this sound a bit like “You will own nothing and be happy?” You’ve got that right.

After 2008, we were supposed to learn the lesson of the dangers of housing bubbles. That is now a joke. No one learned anything. The Fed got busy in 2008 blowing up the housing bubble again and now the mess of 2008 looks like a mere practice run for where we are today. We have simply never seen anything like this. It effectively spells the end of the postwar American dream of middle-class home ownership.

There are solutions to this, but it’s not yet part of the political discussion. There are no signs that the trouble is going to end anytime soon.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Americans are rejecting a plant-based future full of disgusting and possibly even toxic fake burgers and sausages. Folks simply want organic grass-fed beef (like how some small farmers and the Amish do) and are quickly realizing to stay as far away as possible from factory-farmed-vaccinated cows.

The latest sign that the tide is shifting against billionaires like Bill Gates, who advocate for a reset of the food supply chain by ushering in ‘sustainable’ insect burgers and plant-based meat and also push to ban cow farts, comes from McDonald’s US President Joe Erlinger.

At the WSJ Global Food Forum in Chicago on Wednesday, Erlinger admitted the fast-food chain’s plant-based burger tests across San Francisco and Dallas markets ended in a major failure.

At the Four Seasons Hotel Chicago, he said McDonald’s customers aren’t looking for “McPlant or other plant-based proteins from McDonald’s.”

Beyond Meat, which partnered with McDonald’s to sell fake patties, saw its shares drop as much as 5% after the comments hit Bloomberg Terminal. The stock is trading near a record low on dismal fake meat demand. 

Just weeks ago, new research was published in The Lancet from the University of São Paulo and Imperial College London that showed ultra-processed vegan food can increase the risk of heart disease and early death.

Meanwhile, USDA data shows that ground beef prices at supermarkets average $5.2 per pound. Prices are soaring in response to the nation’s herd size collapsing to multi-decade lows.

It’s refreshing to see McDonald’s customers push back against the plant-based agenda pushed by billionaires like Gates. 

Some believe Americans should support their local food supply chains by ditching Walmart or big chain grocery stores and buying meat and produce from local farms.

Authored by Michael Snyder via The Economic Collapse blog,

Unless you are living under a bridge or you are eagerly drinking the kool-aid that the mainstream media is dishing out, you probably understand that the economy has been struggling.  Survey after survey has found that the American people are deeply dissatisfied with how the economy has been performing, and as a result it has become the number one issue this election season.  But even though a large portion of the population is not happy about how things have been going, the truth is that the situation is far more dire than most people realize. 

Just this week we have received quite a bit of very troubling news, and the outlook for the months ahead is very bleak. 

The following are 11 signs that the U.S. economy is in far worse shape than most people think…

#1 Just like in 2008, delinquencies are on the rise.  In fact, credit card delinquencies have now reached the highest level that we have seen in more than 10 years…

Meanwhile, more consumers aren’t making loan payments on time. Credit card delinquencies have hit their highest level in over a decade, and auto delinquencies are also spiking. This could prove to be yet another tripwire for the stock market, as consumer spending accounts for about 70% of U.S. economic activity.

#2 The commercial real estate crisis just continues to escalate.  An article that originally appeared in the New York Times claims that major Wall Street banks have “begun offloading their portfolios of commercial real estate loans hoping to cut their losses”…

Some Wall Street banks, worried that landlords of vacant and struggling office buildings won’t be able to pay off their mortgages, have begun offloading their portfolios of commercial real estate loans hoping to cut their losses.

It’s an early but telling sign of the broader distress brewing in the commercial real estate market, which is hurting from the twin punches of high interest rates, which make it harder to refinance loans, and low occupancy rates for office buildings — an outcome of the pandemic.

#3 When banks get into trouble, they start shutting down branches.  So far this year, U.S. banks have closed more than 400 branches all over the country…

US banks closed 51 branches across the country in the first three weeks of June.

The figures suggest banks are committed to increasingly offering their services online and axing costly bricks-and-mortar locations.

More than 400 bank branches have closed so far in 2024.

#4 Big companies are laying off workers from coast to coast.  For example, approximately 500 Texas truckers just lost their jobs when a large logistics company abruptly shut their doors for good…

A truck and logistics company has abruptly shut – affecting 2,000 workers – just three years after being bought by private equity.

Out of the blue, staff at US Logistics Solutions were given news on Thursday that they were out of a job and would also not get their paychecks on Friday.

Around 500 were truck drivers, and the rest a mixture of warehouse, dock and office workers at the Humble, Texas- based company.

#5 The Dallas Fed Services Index has now been in negative territory for 25 months in a row…

This is the 25th straight month of contraction (sub-zero) for the Dallas Fed Services index and judging by the respondents’ comments, there is a clear place to point the finger of blame

#6 The “restaurant apocalypse” just continues to intensify.  This week, we learned that Hooters has suddenly decided to permanently shut down close to 40 “underperforming” locations…

The Atlanta-based sports bar chain, Hooters, abruptly shuttered dozens of “underperforming” restaurants across the U.S., as it joins a growing list of eateries facing the harsh realities of inflation and changing consumer habits, according to reports.

Nation’s Restaurant News (NRN) reported that word began to spread on Sunday evening that Hooters locations in places like Bryan, Texas; Lakeland, Florida; and Louisville, Kentucky were closing abruptly, with nearly 40 restaurants in the U.S. shutting their doors.

#7 Retail chains continue to go belly up at a staggering rate.  Today, it was being reported that two large retailers in the Northeast have made a decision to file for bankruptcy…

Two sister chains that sell sporting goods have filed for bankruptcy as retailers continue to struggle.

Bob’s Stores, which sells athletic and casual clothing, and outdoor gear retailer Eastern Mountain Sports together have 50 stores across the northeast of America.

#8 We just learned that consumer confidence in the U.S. dropped lower this month…

US consumer confidence teetered slightly in June as Americans grew a little warier about the future, new data released Tuesday showed.

The Conference Board’s latest consumer confidence index dipped to 100.4 in June from a downwardly revised level of 101.3 in May.

#9 The initial consumer confidence reading has been revised down in 7 of the last 8 months.

#10 Housing in the U.S. is now more unaffordable than it has ever been before…

The housing cost burden has hit a record, according to a new report from Harvard’s Joint Center for Housing Studies.

Home prices are now 47% higher than they were in early 2020, with the median sale price now five times the median household income, according to the study.

#11 As I discussed yesterday, the homeless population in the city of Chicago tripled from January 2023 to January 2024…

The number of Chicagoans living in city shelters or on city streets tripled between January 2023 and January 2024, according to the annual survey used by federal officials to track homelessness, city officials announced Friday.

Those at the bottom of the economic food chain are being hit the hardest by the harsh economic conditions that we have been experiencing.

Homelessness, poverty, hunger and theft are all on the rise, and many of those that serve struggling communities say that they are being absolutely overwhelmed because they simply do not have sufficient resources to meet all of the needs.

Sadly, I am entirely convinced that this is just the beginning.  I believe that conditions will eventually become much harsher as the economy continues to deteriorate during the months ahead.

But Joe Biden and his minions insist that everything is just great.

In fact, they would like you to believe that the economy is “booming” right now.

You can believe that if you want, but the cold, hard numbers that we keep getting directly contradict the endless stream of propaganda that we are constantly being fed.

*  *  *

Michael’s new book entitled “Chaos” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.

CDK Global informed auto dealers on Wednesday that it has managed to “bring a small initial test group” of dealers online. This announcement comes a little more than a week after a ransomware attack crippled the software company’s Dealer Management System (DMS), used by thousands of dealers nationwide. 

X user Car Dealership Guy posted a screenshot of the email CDK sent dealers early Wednesday evening. CDK said that once the “small initial test group” goes live on its DMS, it will then onboard other dealers. 

Dear Valued Customers,

Thank you for your continued partnership as we work together to get you back to business.

We have successfully brought a small initial test group of dealers live on the core DMS. Once validation is completed, we will then begin phasing in other dealerships on the core DMS (accounting, parts, service, sales F&I, user management and document management).

You will get an email notification from an official CDK representative and email address in the coming days with details on the phased approach.

BREAKING

CDK Global has *just* successfully restored system access to a small initial test group of dealers!

Huge milestone and hopefully the start of broader restoration.

Once validation is complete, they will begin phasing in other dealerships. pic.twitter.com/2J1PYaK90g

— Car Dealership Guy (@GuyDealership) June 26, 2024

CDK works with more than 15,000 auto dealers nationwide. Since the cyber incident was reported last Wednesday, many have grappled with disruptions.

Major auto dealers, including Sonic Automotive Group, Group 1 Automotive, AutoNation, Lithia Motors, and Asbury Automotive Group, have already filed disclosures with the US Securities and Exchange Commission about the cyber incident negatively impacting their business. 

Bloomberg reported that CDK was hacked by the cyber gang BlackSuit, which demanded millions of dollars. 

X users Car Dealership Guy reported on Tuesday that “Dealership outages will continue until at least June 30th.” 

A Mazda dealership in Seekonk, Massachusetts, told CNN earlier this week, “The financial impact it will directly have on us will take months to correct, if not years.”

The ongoing CDK outage forced many auto dealers to use pen and paper to complete transactions, while some closed their shops altogether. 

By Elwin de Groot, Head of Macro Strategy at Rabobank

Watch the flanks!

Last week, one day before the European Commission published its “Spring Package” in which it reprimanded seven Member States for flouting the budget rules, Hungary launched its Trump-inspired slogan for the upcoming 6-month European Council presidency starting 1 July: “Make Europe Great Again”. With that presidency spanning the US elections and its immediate aftermath, the irony of it wasn’t lost on some observers, especially when Hungarian EU Affair Minister János Bóka argued that “It actually shows manifest the expectation that together we should be stronger than individually but that we should be allowed to remain who we are when we come together. It also portrays the idea that Europe is able to become an independent global actor in our transforming world.” Of course, if anything, Hungary has more often than others acted as a stumbling block for more integration and projecting unity.

It the meantime, the good news is that there is now an agreement on who will get the top jobs in the EU following the elections for European Parliament earlier this month. Those elections showed a shift to the far-right (but not as much as feared by some) and losses at the Greens and particularly the Liberals. But the center (signified by the two biggest parties, the EPP and S&D) held better-than-expected. The political turbulence that followed has been largely of a national making rather than stemming from the direct consequences of the change in composition of the European Parliament.

Hence the quick decisions by the mainstream center parties to have their European ‘management team’ ready. As expected it will consist of Ursula von der Leyen as head of the European Commission President, former Portuguese PM Antonio Costa leading the Council (representing the national leaders) and Estonian PM Kaja Kallas in charge of EU foreign policy.

Hungary’s Viktor Orban hit out on X: “Instead of inclusion, it sows the seeds of division”. Italy’s PM Meloni has also objected to the quick decisions, arguing this team does not reflect the political shift observed in the election, but according to reports Italy has been promised an important post in the Commission. In contrast to Orban, perhaps, there is a strong case for keeping Meloni on board, as she more or less represents the moderate (or, at least, economically rational) voices among the extreme right parties in Europe. The heads of Parliament and the Council will only stay on for the first half of the 5-year parliamentary session and so that could serve as another carrot for the moderates on the right.

In our pre-election report we highlighted two risk scenarios in which the shift from the center towards the far-right could scupper the EU’s increasingly ambitious plans to strengthen its strategic autonomy. The first, and perhaps highest risk, is a form of ‘stasis’ that would make legislation in the next five years sluggish, preventing further integration and potentially leading to a slow but steady demise of Europe in an increasingly hostile (economic and military) environment. The other scenario we called ‘unbalanced policy’, for example due to excessive social spending or spending on non-productive sectors, leading to more inflation but not the desired long-term results.

However the thinking in this piece was that if the political shifts would not be too significant, the centre could still broadly agree with the strategic policy agenda and push through (some of) the required bold changes that would come with it. Yet it increasingly seems that the risks are not so much coming from the center of European power (the EU institutions) but – in football terms – from the flanks, represented by the national satellites (as represented by the Council).

The first example is of course the political turbulence in France since Macron called snap elections for 30 June and 7 July. However you slice and dice it, it is hard to see the center in France not losing ground after these elections. And in the past years President Macron has showed himself as being one of the staunchest supporters of European unity.

The second weak point may well turn out to be Germany. Yesterday we suggested that Germany’s intent to negotiate with China on reduced tariffs on European car imports in exchange for not pushing through the tariffs on Chinese EV’s announced by the EU could still backfire in the longer term, even if it were to bring relief for European car exporters in the near-term. But yesterday there was also further evidence that Germany has succeeded in taking joint financing for military spending in Europe, through ‘defense bonds’, off the table. According to Bloomberg, citing a draft EU strategy document, there is no longer any mentioning of joint borrowing. Instead, the bloc will use “innovative options” to finance an increase in defense spending. Whatever that means exactly is unclear but it’s not joint financing.

We have been arguing for some time that if Europe really wants to get its act together it should not shun more radical changes, including joint financing and the active involvement of European institutions, including the ECB. Further integration clearly has become more difficult with the political shifts in European Parliament and “Make Europe Great Again” coming from the EU’s enfant terrible may sound like a pretty incredible statement, but the biggest challenges right now are actually coming from the flanks of Europe.

Turning to the other side of the globe, Australia’s inflation rate rose to 4% in May, a more than expected increase (from 3.6% in April and with 3.8% expected by the consensus), driven by higher transport and housing costs. Last week the RBA kept rates on hold but warned that there is still a possibility that it may have to hike. Indeed, this piece of data supports our off-consensus view that the next step by the RBA is more likely to be a hike than a cut. Aussie dollar rose 0.4% against the US dollar, despite warnings from Michele Bowman that the Fed may have to keep rates elevated to contain upside risks to inflation.

As credit cards and digital wallets (e.g. Apple Pay, Paytm, Alipay) see increasing adoption around the world, the share of cash being used in transactions is plummeting.

The chart below, via Visual Capitalist’s Nick Routley, looks at cash as a share of transaction value in selected countries at three time periods (2019, 2023, and 2027P).

Highlighted in red is cash’s projected drop from 2019 to 2027.

This data showing the death of cash comes from WorldPay’s Global Payments Report 2024.

Where Cash is King (For Now)

The prominence of cash for use in transactions is dropping in every country measured. This includes countries where cash was preferential method of payment in POS transactions.

One clear example is Nigeria. In 2019, over 90% of transaction value was still in cash payments. That number has now fallen to 55% today. Cash is still the leading payment method in Nigeria and a handful of other nations, but current trends indicate this may not be the case for much longer. For now, cash also remains the leading method of payment in various South American and East Asian countries.

Below is a full list of countries included in the report, along with cash’s share of transaction value in those countries.

Country	Share of POS Transaction Value	Cash is leading payment method in country
Nigeria	55%	✔️
Thailand	46%	✔️
Philippines	44%	✔️
Japan	41%	✔️
Mexico	38%	✔️
Spain	38%	✔️
Indonesia	38%	✔️
Vietnam	38%	✔️
Germany	36%
Peru	35%	✔️
Colombia	34%	✔️
South Africa	33%
Turkïye	33%
Poland	32%
Malaysia	32%	✔️
Saudi Arabia	29%
Argentina	27%	✔️
Italy	25%
Taiwan	25%
Brazil	22%
Chile	22%
Ireland	18%
India	18%
UAE	17%
Belgium	16%
Singapore	15%
United States	12%
France	12%
United Kingdom	10%
South Korea	10%
Hong Kong SAR	9%
Denmark	8%
Finland	7%
Netherlands	7%
Australia	7%
China	7%
Canada	6%
New Zealand	6%
Sweden	5%
Norway	4%

Where the Death of Cash is Already a Reality

In some places, cash payments are already a rarity. This includes Canada, New Zealand, Australia, and most Nordic countries.

The report predicts that France, Singapore, South Korea, the UK and the U.S. will fall below the 10% transaction value threshold for cash by 2027.

By RFE/RL Staff via OilPrice.com,

• On June 18, France announced the sale of 36 Caesar self-propelled howitzers to Armenia, leading to harsh criticism from Azerbaijan and Russia, highlighting the rising tensions in the Caucasus.

• Azerbaijani and Russian officials have labeled the arms sale as provocative, with fears of sparking a potential Third Karabakh War as regional hostilities persist.

• The transaction underscores the ongoing diplomatic feud between France and Azerbaijan, with France showing firm support for Armenia’s military strengthening and territorial integrity.

A cold conflict is escalating between France and Azerbaijan. And the latest twist in the tit-for-tat spat is heightening the prospect of renewed conflict in the Caucasus.

On June 18, French Defense Minister Sebastien Lecornu announced the sale of 36 Caesar self-propelled howitzers to Armenia. The move immediately sparked vitriolic responses from Azerbaijan and Russia. The Azerbaijani Defense Ministry called the sale as a “provocative” step that could revive the region as a “hotbed of war.”

Russian Foreign Ministry spokeswoman Maria Zakharova echoed the Azerbaijani narrative, saying that “Paris is provoking another round of armed confrontation in the South Caucasus, and they are doing it in different ways.” 

The Armenian Foreign Ministry brushed off the criticism, issuing a statement asserting that “it is the sovereign right of every country to have a combat-ready army equipped with modern military hardware.”

In recent days, Azerbaijan’s Defense Ministry has reported several instances in which Armenian forces allegedly fired on Azerbaijani positions along the two countries’ border. Yerevan has denied allegations of initiating any gunfire exchange. At the same time, reports appearing in state-connected media in Azerbaijan have hinted at the rising potential of renewed conflict; one commentary published June 22 by the official APA news agency raised the possibility of a “Third Karabakh War.”

“The Armenian leadership, which did not draw any conclusions from its successive defeats in the military and diplomatic fields, has begun to exhibit a non-constructive approach,” the APA commentary stated. It went on to single out France as provoking confrontation in the Caucasus.

“In the 21st century, France, which still has the status of a shameful neo-colonial state, is trying to play the provocateur role it plays on a global scale, in the processes in the South Caucasus region,” according to APA.

As the APA statement highlights, Azerbaijan’s sharp response is connected to Baku’s deep antipathy for France, rooted in Paris’ strong support for Armenia throughout the three-decade struggle for control of Nagorno-Karabakh, a conflict that ended late last year with Azerbaijan’s decisive defeat of Armenian forces and the cleansing of Karabakh’s ethnic Armenian population.

The reaction is also linked to a chain of events since the start of 2024, in which France and Azerbaijan have taken turns antagonizing each other. In March, for example, French president Emmanuel Macron welcomed Armenian Prime Minister Nikol Pashinyan in Paris, offering unambiguous political backing for Armenia’s territorial integrity and its efforts to improve relations with the West. 

Resenting what it perceived as further meddling in the Karabakh peace process, Azerbaijan reportedly helped stir up independence sentiment that led to violent protests in May in the French Pacific colony of New Caledonia. Baku denied French allegations of involvement, but Azerbaijani media outlets did start assailing France’s “neo-colonial” behavior. 

Azerbaijani President Ilham Aliyev appeared to take a backhanded swipe at France earlier in June when he raised the possibility of Azerbaijan creating a development fund to help small island nations.

The howitzer sale can be seen as France clapping back at Baku. But a feud that has been up to this point limited mainly to verbal sniping now has reached a point where, if not managed well, it could prompt actual bullets to start flying again in the Caucasus.

Eurasianet.org

The United Arab Emirates is set to attract the most millionaires in 2024, while China and the UK are expected to lose the largest number of high-net-worth individuals (HNWIs).

This graphic, via Visual Capitalist’s Marcus Lu, shows the top 10 countries projected to have the highest net inflows or net outflows of HNWIs in 2024. HNWIs have a liquid investable wealth of $1 million or more. All figures come from the Henley Private Wealth Migration Report 2024.

Why is Attracting Millionaires Important?

According to Henley & Partners, 20% of HWNIs are entrepreneurs (rising to 60% for centi-millionaires and billionaires). As a result, countries that attract HWNIs from other parts of the world may see powerful benefits like job creation and investment.

Countries Attracting the Most Millionaires in 2024

The UAE’s strategic focus on economic diversification and government investment has positioned it as a global economic powerhouse.

The country has seen significant investments in tourism, real estate, logistics, financial services, and technology markets.

In addition, the adoption of international standards in regulatory and market frameworks, coupled with attractive tax initiatives, has drawn young entrepreneurs worldwide to the country.

According to Warwick Legal Network, the UAE accounts for over 30% of foreign direct investment inflow to the MENA region.

Countries Losing the Most Millionaires in 2024

Meanwhile, uncertainty over China’s economic trajectory and geopolitical tensions have led millionaires to leave the country. China saw the world’s biggest outflow of high-net-worth individuals last year and is expected to see a record exodus of 15,200 in 2024.

Similarly, the UK is expected to lose 9,500 millionaires this year, on top of the 16,500 millionaires it lost in the six-year period following Brexit.

This is an interesting and noteworthy reversal in fortune, since historically, the UK has drawn wealthy families from Europe, Africa, Asia, and the Middle East.