Record July Fourth Travel Expected As Gas Prices Will “Remain Stable Until After Labor Day” 

Record July Fourth Travel Expected As Gas Prices Will “Remain Stable Until After Labor Day” 

Gasoline prices at the pump could rise next week as a record 71 million Americans start their travel before early next month’s Independence Day holiday. Prices peaked at $3.67 per gallon in mid-April and have recently dipped to $3.449 due to weakening demand. 

New data from the American Automobile Association shows that 70.9 million folks will travel 50 miles or more from home during the Independence Day holiday travel period between June 29 and July 7. This is a 5% rise compared to 2023 and an 8% increase over 2019. 

“With summer vacations in full swing and the flexibility of remote work, more Americans are taking extended trips around Independence Day,” said Paula Twidale, Senior Vice President of AAA Travel, adding, “We anticipate this July 4th week will be the busiest ever with an additional 5.7 million people traveling compared to 2019.”

Of the 71 million, a record 60.6 million people are expected to travel by car, and that’s a 2.8 million increase from last year. This number also exceeds 2019 figures of 55.3 million. 

AAA projects the national average for gasoline at the pump “will likely continue going down leading up to Independence Day” and “remain relatively stable until after Labor Day.” 

Prices are currently around $3.49, tumbling in recent weeks from $3.70 on the news the Biden administration is planning to drain the entire US Northeast gas reserve to push prices further down from the politically sensitive $4 level ahead of the presidential elections in November. 

AAA noted, “An important caveat is hurricane season – underway now – which could affect gas prices should a storm negatively impact Gulf Coast oil production and refining centers.” 

In a recent note, we’ve pointed out that the La Nina weather phenomenon is expected to fuel an active Atlantic hurricane season. This could disrupt major US Gulf Coast refineries and ignite a gas price storm for the Biden camp. 

Overall, gasoline demand is expected to remain soft despite an increasing number of Americans traveling more miles. According to RBC Capital Markets, gas station spending during the Memorial Day holiday was flat year over year. 

On Tuesday, Phillips 66 CEO Mark Lashier told the audience at the JPMorgan conference that gasoline demand has not “hit its normal driving season stride,” mostly due to a “bifurcated” economy that has depressed fuel demand among the working poor. 

Patrick De Haan, head of petroleum analysis at GasBuddy, told Bloomberg that gas demand is running softer than last summer: 

“We usually see demand peak for gasoline sometime in late July, so there’s still some opportunity … but it does look like we are running a little bit lower than last year.”


Given these factors, gas prices are likely to remain stable around $3.5, if not start to rise due to higher WTI prices. The real concern for the Biden administration would be a tropical system taking out a Gulf Coast refinery. 

Tyler Durden
Fri, 06/21/2024 – 15:20

via ZeroHedge News Tyler Durden

The Unsustainable AI-Driven Lending Boom

The Unsustainable AI-Driven Lending Boom

Authored by Douglas French via The Mises Institute,

For lending, as in all things, necessity is the mother of invention. No matter the rate, lenders want to lend and borrowers want to borrow, with both sides tending to overdo it.

The Wall Street Journal (WSJ) reports that the newest collateral thing is the artificial intelligence (AI) chip. Wall Street heavyweight Blackstone led a $7.5 billion round of financing at the end of May for CoreWeave, “a New Jersey-based startup that owns artificial-intelligence chips and associated computing gear in data centers.”

The collateral of the realm these days is Nvidia’s graphics-processing unit, or GPU, chip. For the moment, Nvidia can’t keep up with demand from the likes of Amazon and Microsoft. These companies are gorging themselves on the chips, sending GPU chip prices skyward.

“For Wall Street, their utility has given them another kind of power, turning them into assets that can backstop loans,” Asa Fitch and Miriam Gottfried wrote for the WSJ.

More than $10 billion has been raised using GPU chips as collateral. Startups in the AI space, while growing quickly, are not profitable. Thus, loan interest rates are in the low double digits as traditional lenders, which charge lower rates, have avoided the sector. Instead, asset-based lenders, which small businesses and real estate developers have typically had to turn to are providing capital for this high-flying technology niche.

“When you’re trying to build and scale a company at the speed that we’re going, it is access to capital that defines success or failure,” Michael Intrator, CoreWeave’s CEO, told the WSJ.

Over time, he hopes his company can obtain cheaper funding.

However, for now, “it gets us what we need, which is the powder to be able to move at this size and scale.”

Mr. Fitch and Ms. Gottfried describe the deal structure as “a metaphorical lockbox, housing all of CoreWeave’s AI chips,” with all “revenue the company generates from clients using those chips … [going] first toward paying its lenders.” Most accounts-receivable factoring structures work much the same way. However, the term “metaphorical lockbox” will make a veteran lender scoff.

“When I started doing this, everybody thought I was nuts. Now people are starting to see the light,” said Stéphane Fisch, a principal at Argo Capital who has pitched one such deal.

At the retail investor end of the AI boom, lending and borrowing continues apace. Almost Daily Grant’s reports that the people’s brokerage, Robinhood, has cut margin lending rates to “6.75 percent financing on balances up to $50,000, with that rate dropping to 5.7 percent on accounts of $50 million and above.” The favorite of millennials and Gen Zers previously was made to pony up margin loan rates ranging from 8 percent to 12 percent. Rival brokerage Charles Schwab offers much stiffer rates of 11.83 percent to 13.58 percent.

For readers wondering when the next market accident is about to happen, Robinhood Chief Brokerage Officer Steve Quirk may be offering a clue when he told MarketWatch: “People use [margin investing] episodically when they see a great opportunity or love a specific investment. But I think where the opportunity lies is, in addition to our current customers, we’re seeing a whole lot of new customers that are more frequent margin users with larger balances.”

Almost Daily Grant’s warns us:

“Aggregate margin debt outstanding registered at $775.5 billion at the end of April according to FINRA. That’s up 23 percent from the year-ago period and equivalent to 2.8 percent of 2023 GDP, roughly matching the output-adjusted figure logged at the peak of the late 1990s bubble.”

Those numbers are no match for the $936 billion reached in the fall of 2021, equivalent to 3.43 percent of the GDP.

Of course, lending and borrowing success depends on the strength of the AI boom.

For the moment, the demand for AI chips appears insatiable.

At the same time, big tech companies and startups can’t seem to generate enough revenue from AI to justify the cost of the computing power that underlies it—a story that sounds very familiar.

Tyler Durden
Fri, 06/21/2024 – 15:00

via ZeroHedge News Tyler Durden

“Everything Is Frozen”: Third-Day Of Cyberattack Leaves 15,000 Auto Dealerships Crippled

“Everything Is Frozen”: Third-Day Of Cyberattack Leaves 15,000 Auto Dealerships Crippled

Over 15,000 auto dealerships nationwide face major disruptions due to an ongoing cyberattack for the third day, shutting down their backend management systems. This has halted sales for some dealers and forced others to complete transactions the old-fashioned way: by hand. 

CDK Global, the leading provider of dealership management systems and digital retailing solutions, said cybersecurity breaches began on Tuesday. By Wednesday afternoon, CDK’s core systems were restored, only to be shuttered on Thursday after a second hack attack. This has made it nearly impossible for thousands of dealers to buy and sell vehicles this week.

“We cannot process paperwork. Everything is frozen, everything is tied up — we cannot move money back and forth to pay off cars, to finance our customers’ transactions,” Tom Maioli, who owns Celebrity Motor Car Company with dealerships across  York and New Jersey, told CBS MoneyWatch. He said his business is “completely shut down.”

Maioli continued, “We cannot process paperwork. Everything is frozen, everything is tied up — we cannot move money back and forth to pay off cars, to finance our customers’ transactions.”

Consumers are being greeted with signs like this at auto dealers nationwide…

On Thursday, X user Car Dealership Guy was featured on CNBC. He said the auto industry’s biggest question after all of this chaos is: “Will the industry continue centralizing and consolidating technology? This has been the biggest trend in auto retail.” 

Such disruptions have forced back-office support staff to write orders and complete paperwork without computers (clearly first-world problems).

“My selling team can hand-write a buyer’s order,” Brian Benstock, general manager of Long Island City-based Paragon Honda and Paragon Acura dealership, told CNN.

There have been no reports (yet) of foreign adversaries involved in the cyber breach. Also, CDK has provided no timeline for when core systems will be restored.

A lingering concern is the economic fallout from this cyber incident, given the size of the auto industry’s size.

Tyler Durden
Fri, 06/21/2024 – 14:40

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Left-Leaning Outlets Amplify Their Anti-Bitcoin Bias Following Trump’s Endorsement

Left-Leaning Outlets Amplify Their Anti-Bitcoin Bias Following Trump’s Endorsement

Authored by Fernando Nikolic via,

The media is buzzing about Trump’s recent endorsement of Bitcoin.

Looking at Bitcoin Perception data (chart below), coverage of Bitcoin together with Trump has increased month-over-month since the start of the year, but last week saw quite a stir, since the endorsement seems to be amplifying an already existing anti-Bitcoin bias among some outlets.

Image credit: Mainstream media coverage of Trump + Bitcoin has increased since the start of 2024. (Bitcoin Perception)

Forbes, Fox, and CNBC covered Trump’s move as a positive step for U.S. energy security and economic strength. They highlight how Bitcoin mining could boost energy dominance and act as a defense against centralized digital currencies.

Fox News and Forbes, in particular, stress Bitcoin’s strategic benefits, aligning with libertarian and conservative values.

Image credit: Fox News/Timothy Nerozzi

Image credit: Forbes/Robert Hart

On the flip side, The Independent and The Washington Post are skeptical.

They suggest Trump’s support for Bitcoin is a ploy to gain political and financial backing.

These outlets point out that Trump, who once dismissed Bitcoin, now endorses it – seeing it as an opportunistic flip-flop.

Image credit: Washington Post/Philip Bump

Image credit: The Independent/Richard Hall, Andrew Feinberg

The polarized media landscape makes it hard for the public to get a balanced view.

Pro-Trump outlets focus on Bitcoin’s benefits, while anti-Trump outlets aim to undermine his motives, reflecting the broader political divide.

Historically, left-leaning outlets have slammed Bitcoin mainly on environmental grounds, arguing that Bitcoin mining consumes too much energy and harms the planet.

But now, Trump has taken center stage as their primary target. These outlets are questioning his motives, seeing his pro-Bitcoin stance as a calculated political move rather than genuine support.

It’s as if they haven’t bothered to look deeper into what Bitcoin represents beyond their usual “energy consumption = BAD” mantra.

Now it’s simply shifted to “Trump = BAD” without a nuanced examination of Bitcoin’s potential benefits to the people they portray to represent or its role in technological innovation.

So, is Trump’s stance on Bitcoin mining a strategic move or a political tactic?

It actually depends on which outlet you let in as part of your content diet, because they will tell you different things.

But media perception – or even politics – aside; Trump’s endorsement has certainly sparked a deeper conversation about Bitcoin’s role in U.S. energy policy and tech innovation, and that could move the cultural needle, which is, when you think about it, a potentially more impactful thing than winning the presidency.

So as we get closer to the November elections, expect more heated debates for the peanut gallery through the mainstream media’s Bitcoin coverage.

Because it’s clear: This is not about Bitcoin; it’s just yet another front in the ongoing political battles fought out in the media landscape to sway you towards a political side.

Tyler Durden
Fri, 06/21/2024 – 14:20

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US Bans Kaspersky Antivirus Software, Citing Russian Influence

US Bans Kaspersky Antivirus Software, Citing Russian Influence

Authored by Naveen Athrappully via The Epoch Times,

The U.S. Department of Commerce banned Russian company Kaspersky from selling its anti-virus software and other cybersecurity products in the country after determining that the firm posed an “undue or unacceptable risk to national security.”

“Kaspersky will generally no longer be able to, among other activities, sell its software within the United States or provide updates to software already in use,” the Commerce Department’s Bureau of Industry and Security (BIS) said in a June 20 press release.

The prohibition is applicable to Kaspersky Lab, Inc., the U.S. subsidiary of Moscow-based Kaspersky Lab. The company’s operations were deemed to be risky to the United States “due to the Russian Government’s offensive cyber capabilities and capacity to influence or direct Kaspersky’s operations.”

Such risks could not be dealt with simply through mitigation strategies, which made a total prohibition the only choice left to ensure national interests remain protected, the BIS stated.

Specifically, the BIS determined that Kaspersky was subject to the Russian government’s jurisdiction, which forces it to comply with information requests from Moscow. This could lead to personal information stored on devices with the company’s anti-virus software getting into the hands of Russian authorities.

“Kaspersky has broad access to, and administrative privileges over, customer information through the provision of cybersecurity and anti-virus software. Kaspersky employees could potentially transfer U.S. customer data to Russia, where it would be accessible to the Russian Government under Russian law,” the BIS said.

Commenting on the U.S. ban, the company criticized the Commerce Department for having made a decision based on “present geopolitical climate and theoretical concerns, rather than on a comprehensive evaluation of the integrity of Kaspersky’s products and services.

“Kaspersky does not engage in activities which threaten U.S. national security and, in fact, has made significant contributions with its reporting and protection from a variety of threat actors that targeted U.S. interests and allies.”

The BIS found that Kaspersky also has the power to install malicious software on its customer’s computers or to selectively deny updates. This could leave American citizens and U.S. critical infrastructure vulnerable to malware attacks, the BIS said.

Kaspersky’s software is also integrated into third-party products and services. As such, people who use such third-party products could unknowingly introduce Kaspersky’s programs into their devices or networks, thus potentially compromising their personal data, BIS stated.

Kaspersky said it has implemented “significant transparency measures” to ensure the company’s trustworthiness. Such measures are “unmatched” by any of the company’s peers in the cybersecurity industry.

The Commerce Department’s ban “unfairly ignores the evidence,” the company said.

“The company intends to pursue all legally available options to preserve its current operations and relationships,” Kaspersky said. “The decision does not affect the company’s ability to sell and promote cyber threat intelligence offerings and/or trainings in the U.S.”

Russian Cyber Threat

To minimize the fallout resulting from banning Kaspersky software, the Commerce Department will allow the company to continue certain operations in the country until 12:00 a.m. ET on Sept. 29, 2024.

Such operations include providing anti-virus signature updates and codebase updates. The agency claims this gives Americans enough time to find suitable alternatives.

“Russia has shown time and again they have the capability and intent to exploit Russian companies, like Kaspersky Lab, to collect and weaponize sensitive U.S. information, and we will continue to use every tool at our disposal to safeguard U.S. national security and the American people,” said Secretary of Commerce Gina Raimondo.

According to the BIS, Kaspersky Labs Limited from the United Kingdom as well as AO Kaspersky Lab and OOO Kaspersky Group from Russia have been added to the Entity List “for their cooperation with Russian military and intelligence authorities in support of the Russian Government’s cyber intelligence objectives.”

Companies in the Entity List are subjected to export restrictions and licensing requirements for certain technologies and products.

The Commerce Department’s decision comes after hackers linked to Russia were identified as being responsible for a series of attacks on Microsoft corporate email accounts.

In April, the Cybersecurity and Infrastructure Security Agency (CISA) issued an emergency directive that asked federal agencies to take necessary steps to mitigate Midnight Blizzard, a Russian state-sponsored actor that accessed the email accounts.

Jen Easterly, director of CISA, said the “U.S. government has documented malicious cyber activity as a standard part of the Russian playbook” for several years, “This latest compromise of Microsoft adds to their long list.”

A March 25 report from the Foundation for Defense of Democracies (FDD) pointed out that nations like Russia and China pose a serious threat to U.S. critical infrastructure. In the face of these threats, America’s cyber force generation system is “clearly broken,” it said.

The report called for the creation of an independent cyberservice for the U.S. military alongside the Army, Air Force, Navy, Marine Corps, Coast Guard, and Space Force.

The Epoch Times reached out to the Russian Embassy for comment on the Kaspersky ban.

Tyler Durden
Fri, 06/21/2024 – 12:20

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The State Wants To Nationalize Second Mortgages. What Could Possibly Go Wrong?

The State Wants To Nationalize Second Mortgages. What Could Possibly Go Wrong?

Authored by Artis Shepherd via The Mises Institute,

Recently, Freddie Mac, a government-sponsored enterprise, sought approval from its oversight agency, the Federal Housing Finance Agency (FHFA), to purchase and guarantee second mortgages in the United States.

While the business case for this proposal is deficient (for an excellent perspective on that, see the article by R. Christopher Whalen), I will discuss the economic and political premises behind this move and its possible consequences.

What Does It Mean to “Nationalize Second Mortgages”?

Understanding the single-family mortgage market in the US means realizing that there is no market in the real sense of that term. A whopping 70 percent of home mortgages in the US are owned or guaranteed by Freddie Mac and Fannie Mae, the two government-sponsored enterprises created by Congress to “support the housing market.” When the Federal Housing Administration and ancillary agencies are included, the proportion of mortgages supported by the government rises to approximately 95 percent. Naturally, this ubiquitous subsidy scheme supports a political goal—that of widespread home ownership—while making mortgages more accessible and homes much more expensive.

The government-sponsored enterprises are only nominally private—they were established by Congress specifically to “provide liquidity” to the home mortgage market by buying mortgages originated by banks and other institutions. They have always been subject to regulatory oversight by the government. This is especially true since their failure during the 2008 housing crisis, at which point they were placed into conservatorship under the FHFA.

Aside from mortgage loans, which are primarily used when acquiring a home, homeowners have additional ways to access the equity in their home. Banks and credit unions offer home equity lines of credit, home equity loans, and other second mortgage products to prospective borrowers. They’re “second” because, while secured by the underlying property, they are legally subordinate to the existing (“first”) mortgage. As such, second mortgages are riskier, are generally smaller in size, and incur a higher interest rate. Freddie Mac wants regulatory approval to hold these loans.

Freddie Mac, if approved, will almost certainly be followed by Fannie Mae. Thus, Freddie Mac’s proposal is an attempt to de facto nationalize the second mortgage market, in similar fashion to the existing first mortgage market.

There Will Be Blood

The Freddie Mac proposal should be seen in the context of an ongoing housing bubble combined with all-time highs in consumer debt. The Case-Shiller US National Home Price Index remains at all-time highs despite leveling off around the time benchmark interest rates increased in mid-2022.

Figure 1: Case-Shiller US National Home Price Index compared to the median weekly real earnings of those employed full time, 2019–24

In the meantime, consumer debt continues to climb as price inflation persists and real wages are stuck.

The political imperative is clear—get more people to borrow against the equity that’s been created in the housing bubble of the last ten to fifteen years, especially the last four years. Doing so will likely boost gross domestic product figures as homeowners convert illiquid paper wealth into actual liquidity with which they will buy goods. Never mind that the debt created by this will pile on top of an already-unsustainable burden. This is especially true for the lower- and middle-income segments of the population, as 36 percent of US adults have more credit card debt than emergency savings.

Subverting the Free Market Again

If market participants wanted additional liquidity in second mortgages, they would create and price it accordingly. Shoehorning government participation will only guarantee malinvestment and significant collateral damage, exacerbating existing problems with asset inflation and household indebtedness. The will of individuals acting in their own interests is what creates a healthy market—not government decree from increasingly harebrained regimes desperate for shallow political points.

Tyler Durden
Fri, 06/21/2024 – 11:00

via ZeroHedge News Tyler Durden

EU Tariffs Of Up To 38.1% On China-Made EVs Are About To Take Hold

EU Tariffs Of Up To 38.1% On China-Made EVs Are About To Take Hold

It will only be days now before tariffs of up to 38.1% go into effect on BEVs shipped from China to the EU – the culmination of a monthslong inquiry into how Chinese made EVs have impacted the European auto market. 

As we noted days ago, SAIC is being hit with a 38.1% tariff and BYD is being hit with a 17.4% tariff, the report says. Geely Auto will face a 20% tariff and all tariffs are on top of the EU’s existing 10% tariff. 

EV-makers that cooperated with the probe but weren’t in the three-company sample will face an additional 21% duty, while uncooperative ones will incur the full 38.1%. European brands like Mercedes-Benz, BMW, and Renault, which export China-assembled EVs, will also face extra tariffs, according to Caixin.

China’s Ministry of Commerce criticized the decision, stating the EU ignored facts, WTO rules, and objections from China and EU member states. Beijing vowed to protect Chinese companies’ rights.

Tesla, importing Model 3 sedans from Shanghai, has requested the EU to impose a lower tariff, arguing it received less state support.

Caixin wrote that last year, nearly 20% (300,000 units) of EVs sold in the EU were made in China, according to the European Federation for Transport and Environment.

A 21% duty is expected to reduce Chinese EV exports to the EU by about 30% short-term, said Liu Yan of the China Automotive Technology and Research Center.

The Kiel Institute for the World Economy warned that a 20% tariff could significantly impact EU-China trade and production, stating in a recent report: “The volume of imported electric cars from China would fall by 25%. Converted to the almost 500,000 (electric) vehicles imported in 2023, this corresponds to an estimated 125,000 units worth almost $4 billion.”

The report added that Chinese manufacturers are boosting investments in European car assembly to mitigate the impact of protectionist trade policies.

In February, BYD signed a deal to build its first European electric car factory in Hungary, set to be operational within three years, producing various eco-friendly models.

In April, Chery Automobile acquired a manufacturing facility in Barcelona, formerly owned by Nissan, to localize production in Spain as part of its European expansion.

SAIC announced plans to build its first European EV factory in July last year. The company expressed disappointment with the EU’s decision, stating it contradicts market economy principles and could harm the global auto industry and Sino-European trade relations.

Recall we wrote days ago that the tariffs were only expected to slow, but not stop, Chinese EV sales in Europe. Nikkei Asia said that manufacturers like BYD will remain competitive against local producers despite the tariffs. 

Eugene Hsiao, head of China autos at Macquarie Capital, told Nikkei: “BYD’s cost advantage is high enough that they can profitably export even at a 35% tariff.”

He continued: “BYD has shown a strong willingness to work with local European partners, including establishing relationships with local dealers, selling batteries to Tesla in Germany, planning production in Hungary, establishing shipping dedicated to the EU and possibly even further partnership in other EU countries like Italy.”

Hsiao suggested that BYD’s lower rate might be due to its private ownership and backing by Berkshire Hathaway. He noted that BYD aims to gradually establish its brand in the EU and is more cooperative with local regulators.

The report says that SAIC, the top auto exporter from China for eight years, sold over 250,000 vehicles in Europe in 2023. It claims its sales stem from technology innovation, not government subsidies.

Tyler Durden
Fri, 06/21/2024 – 10:40

via ZeroHedge News Tyler Durden

Biden Haemorrhaging Voters In All Demographics: Women’s Support At 20-Year-Low

Biden Haemorrhaging Voters In All Demographics: Women’s Support At 20-Year-Low

Authored by Steve Watson via,

Analysis By The New York Times reveals that support for Joe Biden among women is at a 20 year low for any Democrat.

The polling shows that Donald Trump has an eight-point lead over Biden among women. 

The turnaround is once again insane. 

Four years ago, Biden led Trump by 13 points among women. Now, Trump has gained 21 points. The figures were gleaned from the Times’s average of more than 30 polls conducted since January.

The Times notes “Overall, twice as many women say they were better off financially under Mr. Trump.”

It adds that “Young women, a key constituency that Democrats are hoping to retain this cycle, were nearly three times as likely to say things were better for them financially under Mr. Trump than Mr. Biden.”

The report also notes how Biden’s support among Black and Latino women is in free fall, calling it “especially striking.”

“He is winning among Black women in the KFF survey by 58 percentage points, but that represents a significant drop from his 86 percentage point margin among Black women in the approach to the 2020 election, according to an average of New York Times/Siena College polls from that election,” the report notes.

It adds that “Biden’s lead with Hispanic women has also shrunk substantially, to about 12 points.”

As we previously highlighted, Biden’s loss of support among Black voters as they shift allegiance to Trump is historic.

CNN data reporter Harry Enten expressed shock at just how much support Biden has lost among the demographic, noting “We’re careening towards a historic performance for a Republican presidential candidate, the likes of which we have not seen in six decades.”

Meanwhile yet another poll, this one from Quinnipiac, shows that Biden’s support among young voters is plummeting.

“Biden is out of step with young people on a number of key issues,” Aidan Kohn-Murphy, the founder of Gen-Z for Change, which was previously TikTok for Biden, told the Washington Post

He called “the frustrations of young progressive leaders a barometer of widespread dissatisfaction among Gen Z voters.” 

Pundits and Democratic insiders have suggested that the upcoming debate against Trump is Biden’s final chance to turn things around, and if he doesn’t he could be forced to stand down.

*  *  *

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

Tyler Durden
Fri, 06/21/2024 – 10:20

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Existing Home Sales Tumble In May… As Prices Set New Record High

Existing Home Sales Tumble In May… As Prices Set New Record High

US existing home sales fell for the third straight month in May (-0.7% MoM vs -1.0% exp). This left home sales down 2.8% YoY (YoY sales have not increased since July 2021)…

Source: Bloomberg

The total home sales SAAR is push back towards COVID lockdown lows once again at 4.1mm, but prices accelerated to a new record high…

Source: Bloomberg

“Home prices reaching new highs are creating a wider divide between those owning properties and those who wish to be first-time buyers,” NAR Chief Economist Lawrence Yun said in a statement.

“Eventually, more inventory will help boost home sales and tame home price gains in the upcoming months.”

The supply of homes on the market increased 18.5% from the same month last year to 1.28 million, but it’s still well below the level seen before the pandemic when mortgage rates were much lower.

Source: Bloomberg

That’s quite a divergence between price and sales…

Source: Bloomberg

And given that mortgage rates remain stubbornly above 7%, existing home sales show no signs of improving anytime soon…

Source: Bloomberg

About 67% of the homes sold were on the market for less than a month in May, roughly flat from the prior month, while 30% sold above the list price. Properties remained on the market for 24 days on average in May, compared with 26 days in April, NAR’s report said.

Sales in the South, the largest region, fell for a third month while transactions in the other three major areas were unchanged in May.

First-time buyers made up 31% of purchases, down slightly from a month earlier.

Finally, homebuyer confidence has NEVER been worse…

Source: Bloomberg

And what will happen if The Fed cuts rates?

Tyler Durden
Fri, 06/21/2024 – 10:13

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US PMIs Surprisingly Surge Despite Plummeting ‘Hard Data’, EU PMIs Slump

US PMIs Surprisingly Surge Despite Plummeting ‘Hard Data’, EU PMIs Slump

After this morning’s ugly picture across European PMIs, preliminary June US PMIs were also expected to decline modestly, but remain in expansion (above 50) for both manufacturing and services.

But, in the face of puking US hard macro data, the soft survey data surprised to the upside with Manufacturing at 51.7 (51.3 prior, 51.0 exp) and Services at 26-month highs at 55.1 (54.8 prior, 54.0 exp)…

Source: Bloomberg

The US Services print is above all analysts’ estimates…

Source: Bloomberg

Quite a divergence from the rest of the world…

Source: Bloomberg

Commenting on the data, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said:

“The early PMI data signal the fastest economic expansion for over two years in June, hinting at an encouragingly robust end to the second quarter while at the same time inflation pressures have cooled.

The PMI is running at a level broadly consistent with the economy growing at an annualized rate of just under 2.5%. The upturn is broad-based, as rising demand continues to filter through the economy. Although led by the service sector, reflecting strong domestic spending, the expansion is being supported by an ongoing recovery in manufacturing, which so far this year is enjoying its best growth spell for two years.

“The survey also brings welcome news in terms of job gains, with a renewed appetite to hire being driven by improved business optimism about the outlook.

Selling price inflation has meanwhile cooled again after ticking higher in May, down to one of the lowest levels seen over the past four years. Historical comparisons indicate that the latest decline brings the survey’s price gauge into line with the Fed’s 2% inflation target.”

Not exactly a Fed rate-cutting scenario!!

As we detailed earlier, judging by the unexpected freefall and across-the-board miss in Europe’s PMIs this morning, the ECB may have cut rates too little, too late.

The Euro area composite flash PMI declined by 1.3pt to 50.8, below consensus expectations of 52.5, prompting analysts to comment that “this should be a further reason for the ECB to proceed cautiously with interest rate cuts.”

According to Goldman, the deceleration in the composite index was broad-based across sectors, though skewed towards the manufacturing sector, where the output index fell (by 3.4pt) to 46.0. Here is a snapshot of the reports:

  • Euro Area Composite PMI (June, Flash): 50.8, missing consensus 52.5, last 52.2.

    • Euro Area Manufacturing PMI (June, Flash): 45.6, missing consensus 47.9, last 47.3.

    • Euro Area Services PMI (June, Flash): 52.6, missing consensus 53.4, last 53.2.

  • France Composite PMI (June, Flash): 48.2, missing consensus 49.4, last 48.9.

  • Germany Composite PMI (June, Flash): 50.6, missing consensus 52.7, last 52.4.

  • UK Composite PMI (June, Flash): 51.7, missing consensus 53.0, last 53.0.

Across countries, the decline in the area-wide index was broad-based.

  • France: The French composite flash PMI decreased by 0.7pt to 48.2 in June, notably below consensus and our expectations. The decline was driven by both sectors, with the services index falling (by 0.5pt) to 48.8, and the manufacturing output series dropping (by 1.7pt) to 45.3. The press release state that “the level of incoming new business weighed on activity, [with] some panel members linking lower output volumes to the upcoming election”.
    • Services Flash PMI (Jun) 48.8 vs. Exp. 50.0 (Prev. 49.3);
    • Manufacturing Flash PMI (Jun) 45.3 vs. Exp. 46.8 (Prev. 46.4)
  • Germany: The German composite flash PMI decreased by 1.9pt to 50.6 in June, below consensus and our expectations. The deceleration was broad-based across sectors, though skewed heavily towards the manufacturing sector, where the output index fell (by 4.0pt) to 44.9.
    • Services Flash PMI (Jun) 53.5 vs. Exp. 54.4 (Prev. 54.2);
    • Manufacturing Flash PMI (Jun) 43.4 vs. Exp. 46.4 (Prev. 45.4).
  • Periphery: The periphery composite PMI decreased by 1.2pt to 52.8, driven by a decline across both sectors, skewed notably towards manufacturing, where the output index fell (by 3.4pt) to 47.1.
  • In the UK, the composite flash PMI declined to 51.7, below consensus expectations of a flat reading, on the back of a deceleration in services activity, where the index fell by 1.7pt to 51.2, only partly offset by a slight improvement in manufacturing activity.

In its commentary on the results, Goldman said it sees three main takeaways from today’s data.

  • First, a loss of momentum in both the Euro area and the UK headline numbers. Despite expanding activity overall, Q2 growth momentum appears to be weaker than at the beginning of the year.
  • Second, the drivers of the slowdown appear to be different, with the UK recording strong and expanding manufacturing sector activity, as opposed to the broad-based decline in manufacturing seen across the Euro area.
  • Third, the PMI price components showed a slight divergence this month, with the Euro area mostly seeing benign price developments, following the ECB cut earlier this month, but UK prices gaining strength, driven in part by stronger demand expectations.

In response to the ugly PMI prints, European bond yields slumped and also dragged down the EUR, while pushing the USD higher. Curiously, despite the virtual assurance of much more QE coming, both gold and crypto also slumped to session lows after the dismal numbers. Expect that to reverse once the selling momentum ignition algos are exhausted.

Tyler Durden
Fri, 06/21/2024 – 09:55

via ZeroHedge News Tyler Durden