Markets are going to get volatile this summer as investors ramp up speculation about the US Federal Reserve’s interest rate policy as fresh inflation data is released, warns the CEO of one of the world’s largest independent financial advisory, asset management and fintech organizations.
The warning from deVere Group’s Nigel Green comes as the US government releases the consumer price index for April on Wednesday, showing that US CPI fell to 4.9%.
He says: “The US CPI data is out and, at 4.9%, came in lower than expectations.
“Investors will be asking ‘Where do we go from here?’
“Many senior analysts will now insist that this will be enough for the Federal Reserve to pivot at their meeting in June and pause the hiking agenda.
“Some will go further and argue that the central banks will cut rates as early as July.
“Others, however, believe that the Fed will remain cautious about inflation flaring up again and that officials will ultimately insist upon at least another interest rate hike. This could cause jitters in the markets as some investors, concerned about short-term profits, will move into panic-selling mode.”
He continues: “What we do know for certain are two things.
“First, speculation is going to increase and that this triggers market volatility. Investors should brace for a turbulent summer fuelled by uncertainty.
“Second, the US economy is cooling quicker than had been anticipated. We put this down to the Fed being too aggressive with their rate hikes.
“As I said last week, the failing Fed made another mistake with the latest interest rate hike, which could push the world’s largest economy not only into a short-term but a longer-term recession. Clearly, this would not only be a huge issue for the US, but the global economy too.”
The deVere CEO goes on to add: “The reality is investors must be vigilant and not become complacent due to the potential of no more imminent hikes and/or the possibility of rate cuts.
“Plus, we have the Republicans and Democrats failing to agree on to how to deal with the major issue of the US debt crisis. Last time this happened we had a 20% drop in the market.
“It’s essential for investors to take good advice and realise that in a fast-changing world the underlying importance of being in the right sectors at the right time still applies, in fact more now than ever.”
He concludes: “We expect markets to be in for a wild ride this summer. But, as ever, where there’s volatility, there is also considerable opportunity.”
About:
deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients. It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.
At the close of the stock market yesterday, the Dow Jones Index (US30) decreased by 0.17%, and the S&P 500 Index (US500) lost 0.46%. The NASDAQ Technology Index (US100) fell by 0.63% on Tuesday. Discussions over the US debt limit dampened investor sentiment as there was no progress on preventing a US default before the anticipated June 1 deadline.
President Joe Biden will meet with House Speaker Kevin McCarthy today. Both politicians face the need to reach an agreement on the debt ceiling, or else the US will face default as early as June 1. McCarthy is pushing for spending cuts and deficit reduction in exchange for raising the debt ceiling, while Biden wants it raised as a condition for any budget negotiations.
According to a new poll, public confidence in Jerome Powell’s leadership of the Federal Reserve has plummeted and is now at or below the level of his predecessors. A Gallup poll released Tuesday found that 36% of Americans believe they have confidence that the Federal Reserve chairman will do or recommend the right thing for the economy. That’s down from 37% for Janet Yellen during her first year at the helm of the Fed in 2014. Confidence in the Fed usually follows the state of the economy. President Joe Biden has 35% American confidence in the economy, the lowest of any president since George W. Bush got 34% during the 2008 financial crisis.
Shares of PayPal Holdings Inc (PYPL) fell more than -11% as the payments company cut its annual transaction margin forecast. Shares of Palantir Technologies (PLTR) jumped more than 23% yesterday after the analyst company reported better-than-expected first-quarter results and said it expects earnings in every quarter this year.
Stock markets in Europe were mostly down on Tuesday. Germany’s DAX (DE30) added 0.02%, France’s CAC 40 (FR40) decreased by 0.59% yesterday, Spain’s IBEX 35 index (ES35) fell by 0.31%, and the British FTSE 100 (UK100) closed lower by 0.18% on Tuesday. The International Monetary Fund is still concerned about the recent turmoil in the banking sector and believes the risk of a banking crisis remains.
The Bank of England’s monetary policy meeting is due tomorrow. Inflation in the UK is much higher than in the United States and Europe, so the Bank of England will seek to reduce inflationary pressures. Markets expect the Bank of England to raise the interest rate by 0.25% from 4.25% to 4.5%, marking the twelfth consecutive rate hike since December 2021. The Bank of England’s final interest rate is expected to be 4.85% by September 2023.
Crude oil prices rose for the third straight session amid reports that the Biden administration will cancel the remaining withdrawals from the Strategic Petroleum Reserve (SPR) and instead add to it a volume that could reach 200 million barrels. Before the news, oil prices were declining yesterday due to weak data from China. China’s imports fell sharply in April, while exports rose more slowly than expected, adding to signs of a slower-than-expected economic recovery for the world’s biggest crude oil importer. There had been high hopes for the Chinese economy that demand for crude oil would rise sharply in the second quarter, but so far, this has not been seen.
Asian markets traded yesterday without a single trend. Japan’s Nikkei 225 (JP225) gained 1.01% on the day, China’s FTSE China A50 (CHA50) decreased by 0.55% yesterday, Hong Kong’s Hang Seng (HK50) was down by 2.12%, India’s NIFTY 50 (IND50) added 0.01%, and Australia’s S&P/ASX 200 (AU200) was down by 0.17%.
Real wages in Japan fell for the twelfth consecutive month in March as consumer inflation outpaced nominal wage growth. Large companies negotiated wage increases at labor talks in March, and whether this trend spreads to small businesses depends on the outlook for the normalization of monetary policy by the Bank of Japan under new Governor Kazuo Ueda. Inflation-adjusted real wages, a barometer of household purchasing power, fell by 2.9% in March from a year earlier, following the same rate of decline in February.
S&P 500 (F) (US500) 4,119.17 −18.95 (−0.46%)
Dow Jones (US30)33,561.81 −56.88 (−0.17%)
DAX (DE40) 15,955.48 +2.65 (+0.017%)
FTSE 100 (UK100) 7,764.09 −14.29 −0.18%)
USD Index 101.65 +0.27 +0.27%
Important events for today:
– Canada Building Permits (m/m) at 15:30 (GMT+3);
– US Consumer Price Index (m/m) at 15:30 (GMT+3);
– US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
– Switzerland SNB Chairman Jordan speaks at 19:00 (GMT+3).
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
Progress in slowing down US inflation is likely to have stalled, the consumer price index report is expected to show tomorrow – but the Federal Reserve must “resist the temptation” for further interest rate hikes.
This is the warning from Nigel Green, the founder and CEO of deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organizations, ahead of the release of US inflation data on Wednesday that will play a key role in shaping the Fed’s interest rate plans moving forward.
He says: “We expect that The Bureau of Labor Statistics on Wednesday will show higher prices for core goods – fuelled by rising prices of vehicles – which will have the effect of counteracting cooling prices more generally.
“In addition, America’s employers added a sizeable 253,000 jobs in April, showing that the labor market is still surprisingly resilient.
“All this, we believe, will act as a spur to the Federal Reserve to raise rates again at their next meeting in June, after having hiked them last week to a range of 5 to 5.25%, its tenth increase in 14 months, and the highest since 2006.
“I would urge the US central bank to resist the temptation to do so.
“Rate hikes are a blunt instrument as they function by taking the heat down across the board, meaning parts of the US economy, which is already slowing, are likely to get broken.”
The deVere CEO continues: “US inflation has been coming down each month since it hit 9.1% in June 2022.
“We expect headline CPI will come in at an annual rate of 5% for April – the same as in March – meaning that progress to bring down US inflation would have stalled.
“Let’s hope this isn’t a trigger for the Fed to continue on with its rate hike agenda.”
Nigel Green cited three reasons why he believes the US central bank was wrong to have raised rates last week and why it would be wrong to do so next time too.
“First, the crisis within the US financial system is still not over. There remain serious and legitimate concerns that after a string of bank failures, there could be more to come,” he noted.
“The turmoil from the banking crisis is leading to a drop in bank lending, tightening the credit conditions for households and businesses. In turn, this will inevitably lead to a slowdown in economic activity and hiring.
“The Fed’s interest rate hiking agenda has tightened financial conditions which, in part, led to the banking crisis, and now the banking crisis itself is going to put the squeeze on financial conditions even more.
“Second, the time lag for monetary policies is very long. It is said that it takes about 18 months to two years for the full effect of rate hikes to filter fully into the economy.
“Third, the bond market is suggesting a long and/or deep recession with its inverted yield curve. Yields are inversely related to bond prices.”
This is typically the sign of a coming recession – an inverted yield curve has emerged roughly a year before nearly all recessions since 1960.
He concludes: “Investors will pour over the data for clues on the Fed’s policy path on interest rates.
“Regarding the central bank’s future plans, investors will likely be hoping for the best but fearing the worst.”
About:
deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients. It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.
The Dow Jones Index (US30) decreased by 0.17% at Friday’s close, while the S&P 500 Index (US500) added 0.05%. The NASDAQ Technology Index (US100) gained 0.18% on Monday.
Goldman Sachs joins Barclays in predicting that the Federal Reserve will cut interest rates significantly this year. But the latest futures position data from the Commodity Futures Trading Commission shows that hedge funds expect the Fed to keep rates higher longer.
A report from the New York Federal Reserve showed Monday that bank stresses that began in March had little impact on American sentiment. The Federal Reserve regional bank reported in its April survey of consumer expectations that respondents forecast inflation after one year at 4.4%, up from 4.7% in the March survey. The report also showed that respondents’ perceptions of the current financial situation improved in April, while their expectations for the year worsened. Respondents indicated they expect unemployment to rise and to be more likely to lose their jobs, as well as difficulty finding a new job.
The PacWest stock jumped by 5% on Monday. The company announced a dividend cut from 25 cents to 1 cent per share late Friday night. PacWest CEO Paul Taylor assured investors that the bank’s business remains “fundamentally sound.” Concerns about regional banks have not subsided since regulators took over the First Republic last week, leading to the US bank’s third collapse since early March. Rapidly rising interest rates have put pressure on banks with long-term bonds, causing deposit outflows.
Stock markets in Europe were mostly up on Monday. Germany’s DAX (DE30) decreased by 0.05%, France’s CAC 40 (FR40) added 0.11% yesterday, Spain’s IBEX 35 index (ES35) was up 0.70%, Britain’s FTSE 100 (UK100) was not trading Monday.
The European Central Bank should keep raising interest rates amid “too high” core inflation levels, ECB Governing Council spokesman Klaas Knot said over the weekend. The ECB will have to raise borrowing costs “until core inflation is suppressed.” Last week, the eurozone central bank raised its deposit rate by a quarter point to 3.25%, and ECB President Christine Lagarde also signaled that more interest rate hikes are likely.
Oil prices are up more than 2% as recession fears begin to fade. Fears of a recession are easing the risks of lower demand. Typically, oil demand rises in the run-up to summer as more travel occurs. And with OPEC+ countries still cutting production on a daily basis, black gold prices are projected to rise for the next three months. Analysts at Commerzbank say concerns about oil demand are exaggerated and expect prices to rise in the coming weeks.
Asian markets were mostly on the rise yesterday. Japan’s Nikkei 225 (JP225) declined by 0.71%, China’s FTSE China A50 (CHA50) jumped by 1.17%, Hong Kong’s Hang Seng (HK50) added 1.24% over the day, India’s NIFTY 50 (IND50) increased by 1.08%, and Australia’s S&P/ASX 200 (AU200) was up by 0.78%.
Continued soft monetary policy from the Bank of Japan is fueling a rally in Japanese markets, with the Nikkei 225 largely outperforming its global peers on the prospect of soft monetary conditions.
China’s latest trade balance data showed an increase in exports and a drop in imports. This suggests that local demand remains weak, which may prevent a more significant economic recovery this year. The prospect of weak demand in China does not bode well for Asian markets, which depend on the country as an export destination.
Australia recorded its first budget surplus in 15 years as its treasury was bolstered by unanticipated tax revenue from higher commodity prices and wages. The budget projected a small surplus of about A$4 billion ($2.71 billion) for the fiscal year ending in June. At the same time, deficit estimates for subsequent years have been revised downward.
S&P 500 (F) (US500) 4,138.12 +1.87 (+0.045%)
Dow Jones (US30)33,618.69 −55.69 (−0.17%)
DAX (DE40) 15,952.83 −8.19 (−0.051%)
FTSE 100 (UK100) 7,778.38 +75.74 (+0.98%)
USD Index 101.41 +0.20 +0.19%
Important events for today:
– Australia Retail Sales (m/m) at 04:30 (GMT+3);
– China Trade Balance (m/m) at 06:00 (GMT+3);
– US FOMC Member Williams Speaks at 19:05 (GMT+3).
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
Asian markets were a mixed bag on Tuesday as caution kicked in ahead of tomorrow’s key US inflation report, although Chinese shares rose after export data beat market expectations. European futures are pointing to a positive open despite the mixed sentiment, with UK financial markets reopening after a public holiday. In the currency arena, the dollar has entered standby mode ahead of talks between US President Joe Biden and congressional leaders on the debt-ceiling issue. The yen is dominating the G10 space this morning after the new BoJ Governor Ueda mentioned that the central bank could drop its yield curve control policy if inflation reaches its 2% goal. Looking at commodities, gold is limping higher but clearly struggling to nurse the deep wounds inflicted by last Friday’s strong NFP report.
US CPI report in focus
After last Friday’s hot jobs report that saw the US economy create 253,000 jobs in April, much attention will be directed towards the pending inflation data for fresh clues on the Fed’s policy path.
It is worth keeping in mind that even though the Fed signaled a pause in further rate increases, it also left the door open to further tightening if incoming data warrants. Traders are currently pricing in a 49% probability of a 25-basis point cut at the September Fed meeting, according to Fed funds futures. CPI year-on-year is expected to rise 5.0% which would be the slowest pace in almost 2 years while core CPI is forecast to cool to 5.5% from the 5.6% in the prior month.
Looking at the technical picture, the Dollar Index (DXY) remains trapped within a range on the daily charts. Resistance can be found around 102.30 while support is at 101.00. A breakout could be on the horizon with the help of a potent catalyst. If prices slip below 101.00, the next level of interest can be found at 100.80. A rebound from 101.00 may trigger a move up towards 102.30.
Currency spotlight – GBPUSD
Could GBPUSD be gearing up for further upside after jumping to a fresh 2023 high on Monday? Well, it looks like bulls are taking a breather ahead of the US CPI data on Wednesday and BoE decision on Thursday. Markets widely expect the BoE to hike interest rates by 25 basis points with much focus on the minutes, quarterly Monetary Policy Report (MPR), and Governor Bailey’s press conference. Looking at the technical picture, GBPUSD could rally to fresh 2023 highs if BoE hawks dominate the scene with key levels of interest found at 1.2730 and 1.2870 where the 200-week SMA resides.
Commodity Spotlight – Gold
Gold drifted higher on Tuesday as investors braced for the US inflation report mid-week. After being whacked by last Friday’s solid US jobs report which raised the odds of the Fed keeping rates higher for longer, the precious metal could sink further if US inflation remains sticky. Such a development may drag gold back below the $2015 level with bears eyeing the psychological $2000. Alternatively, signs of cooling inflation could inject gold bulls with renewed confidence, propelling prices back toward $2045 and 2023 high at $2063.
When an unexpected rainstorm leaves you soaking wet, it is an annoyance. When a drought leads to fires, crop failures and water shortages, the significance of weather becomes vitally important.
If you could control the weather, would you?
Small amounts of rain can mean the difference between struggle and success. For nearly 80 years, an approach called cloud seeding has, in theory, given people the ability to get more rain and snow from storms and make hailstorms less severe. But only recently have scientists been able to peer into clouds and begin to understand how effective cloud seeding really is.
In this episode of “The Conversation Weekly,” we speak with three researchers about the simple yet murky science of cloud seeding, the economic effects it can have on agriculture, and research that may allow governments to use cloud seeding in more places.
Katja Friedrich, a professor of atmospheric and oceanic sciences at the University of Colorado, Boulder in the U.S., is a leading researcher on cloud seeding. “When we do cloud seeding, we are looking for clouds that have tiny super-cooled liquid droplets,” she explains. Silver iodide is very similar in structure to an ice crystal. When the droplets touch a particle of silver iodide, “they freeze, then they can start merging with other ice crystals, become snowflakes and fall out of the cloud.”
While the process is fairly straightforward, measuring how effective it is in the real world is not, according to Friedrich. “The problem is that once we modify a cloud, it’s really difficult to say what would’ve happened if you hadn’t cloud-seeded.” It’s hard enough to predict weather without messing with it artificially.
Cloud seeding is usually done by planes equipped with devices – like the one attached to the wing of this plane – that spray silver iodide into the atmosphere. Zuckerle/Wikimedia Commons, CC BY-SA
In 2017, Friedrich’s research group had a breakthrough in measuring the effect of cloud seeding. “We flew some aircraft, released silver iodide and generated these clouds that were like these six exact lines that were downstream of where the aircraft were seeding,” she says. They then had a second aircraft fly through the clouds. “We could actually quantify how much snow we could produce by two hours of cloud seeding.” That effect, according to research on cloud seeding, is an increase in precipitation of somewhere around 5% to 20% or 30%, depending on conditions.
Measuring the effect on precipitation – whether rain or snow – directly may have taken complex science and a bit of luck, but in places that have been using cloud seeding for long periods of time, the economic benefits are shockingly clear.
Dean Bangsund is a researcher at the University of North Dakota who studies the economics of agriculture. “We have a high amount of hail damage in North Dakota,” said Bangsund. For decades, the state government has been using cloud seeding to reduce hail damage, as cloud seeding leads to the formation of more pieces of smaller hail compared to fewer pieces of larger hail. “It doesn’t 100% eliminate hail; it’s designed to soften the impact.”
Every 10 years, the state of North Dakota does an analysis on the economic impacts of the cloud seeding program, measuring both reduction in hail damage and benefits from increased rain. Bangsund led the last report and says that for every dollar spent on the cloud seeding program, “we are looking at something that is anywhere from $8 or $9 in benefit on the really lowest scale, up to probably $20 of impact per acre.” With millions of acres of agricultural fields in the cloud seeding area, that is a massive economic benefit.
Both Freidrich and Bangsund emphasized that cloud seeding, while effective in some cases, cannot be used everywhere. There is also a lot of uncertainty in how much of an effect it has. One way to improve the effectiveness and applicability of cloud seeding is by improving the seed. Linda Zou is a professor of civil infrastructure and environmental engineering at Khalifa University in the United Arab Emirates.
Her work has focused on developing a replacement for silver iodide, and her lab has developed what she calls a nanopowder. “I start with table salt, which is sodium chloride,” says Zou. “This desirable-sized crystal is then coated with a thin nanomaterial layer of titanium dioxide.” When salt gets wet, it melts and forms a droplet that can efficiently merge with other droplets and fall from a cloud. Titanium dioxide attracts water. Put the two together and you get a very effective cloud-seeding material.
From indoor experiments, Zou found that “with the nanopowders, there are 2.9 times the formation of larger-size water droplets.” These nanopowders can also form ice crystals at warmer temperatures and less humidity than silver iodide.
As Zou says, “if the material you are releasing is more reactive and can work in a much wider range of conditions, that means no matter when you decide to use it, the chance of success will be greater.”
This episode was written and produced by Katie Flood. Mend Mariwany is the executive producer of The Conversation Weekly. Eloise Stevens does our sound design, and our theme music is by Neeta Sarl.
At the close of the stock market on Friday, the Dow Jones Index (US30) increased by 1.65% (-1.30% for the week), and the S&P 500 Index (US500) was up by 1.85% (-0.73% for the week). Technology Index NASDAQ (US100) gained 2.25% on Friday (+0.21% for the week). Investor fears that the economy is headed for a recession in the second half of the year bolstered bets that interest rates will soon decline.
Friday’s data showed that the US economy added 253,000 jobs (forecast +181,000). The unemployment rate fell from 3.5% to 3.4%. The unexpected rise in US hiring and payrolls last month makes it more likely that the Federal Reserve will hold interest rates high longer and possibly keep the possibility of an 11th straight hike in June.
St. Louis Federal Reserve President James Bullard said Friday that he is willing to be “open-minded” about whether to raise rates or leave them unchanged at the Fed’s June meeting, joining the “data-dependent” position. Bullard said he thinks the 5% to 5.25% rate level reached this week is still at the “lower end” of what might be needed; his own projections suggest that rates may need to rise another half a point for inflation to decline steadily. The US inflation data in the coming week will give an indication of whether the Federal Reserve can halt its series of interest rate hikes at next month’s meeting.
Deposits at US commercial banks fell to their lowest level in nearly two years by the end of April, data released Friday by the Federal Reserve showed. Total lending by banks rose, driven by record levels of outstanding loans and leases.
Equity markets in Europe were mostly up on Friday. German DAX (DE30) gained 1.44% (+0.48% for the week), French CAC 40 (FR40) added 1.26% on Friday (-0.88% for the week), Spanish IBEX 35 (ES35) increased by 1.11% (-2.06% for the week), British FTSE 100 (UK100) was up 0.98% (-0.68% for the week).
The European Central Bank will continue to raise interest rates until inflation is under control, two ECB officials said Friday. French central bank governor François Villrois de Galleau and his Lithuanian counterpart Gediminas Simkus confirmed the ECB’s intention to raise borrowing costs even further. Data on Friday also showed that Eurozone retail sales fell more than expected in March, signaling a cooling of demand.
Saudi Arabia’s economy grew by 3.9% in the first quarter thanks to non-oil activity. The IMF reports that the Saudi economy grew by 8.7% last year but forecasts that Saudi GDP growth will increase by 3.1% this year.
Gold fell back from record highs amid signs that the Fed may raise rates again in June. Gold has an inverse correlation to government bond yields, which depend on the dollar index. A rise in interest rates causes the dollar and government bond yields to rise, which is negative for gold and silver. But the medium-term outlook for gold for the rest of the year remains bullish, as the US Federal Reserve is in the final phase of its tightening cycle.
Asian markets have gained substantially over the past week. Japan’s Nikkei 225 (JP225) gained 2.39%, China’s FTSE China A50 (CHA50) added 0.37%, Hong Kong’s Hang Seng (HK50) increased by 0.50%, India’s NIFTY 50 (IND50) jumped by 0.96%, and Australia’s S&P/ASX 200 (AU200) was up by 0.37%.
On Friday, the Monetary Authority of Singapore (MAS) imposed additional capital requirements on DBS Bank, the banking arm of the country’s largest lender, DBS Group, after disruptions to its banking services in recent months.
The Australian government intends to lower its inflation forecasts and also forecasts a longer unemployment decline in the 2023/24 budget, which should lead to a much-needed rise in real wages. Unemployment is forecast at 3.5% at the end of the second quarter.
In the commodities market, futures on cotton (+4.03%), wheat (+3.94%), silver (+2.79%), and corn (+2.09%) showed the biggest gains last week. Futures on natural gas (-12.32%), WTI oil (-7.11%), Brent oil (-6.17%), and lumber (-2.15%) showed the largest drop.
S&P 500 (F) (US500) 4,136.25 +75.03 (+1.85%)
Dow Jones (US30)33,674.38 +546.64 (+1.65%)
DAX (DE40) 15,961.02 +226.78 (+1.44%)
FTSE 100 (UK100) 7,778.38 +75.74 (+0.98%)
USD Index 101.28 -0.12 -0.12%
Important events for today:
– Japan Monetary Policy Meeting Minutes at 02:50 (GMT+3);
– Japan Services PMI (m/m) at 03:30 (GMT+3);
– German Industrial Production (m/m) at 09:00 (GMT+3).
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
Mindfulness and self-compassion are now buzzwords for self-improvement. But in fact, a growing body of research shows these practices can lead to real mental health benefits. This research – ongoing, voluminous and worldwide – clearly shows how and why these two practices work.
One effective way to cultivate mindfulness and self-compassion is through meditation.
For more than 20 years, as a clinical psychologist, research scientist and educator, I taught meditation to students and clinical patients and took a deep dive into the research literature. My recent book, “The Self-Talk Workout: Six Science-Backed Strategies to Dissolve Self-Criticism and Transform the Voice in Your Head,” highlights much of that research.
Could mindfulness meditation be the next public health revolution?
Be patient when starting a meditation practice
I didn’t like meditation – the specific practice sessions that train mindfulness and self-compassion – the first time I tried it as a college student in the late ‘90s. I felt like a failure when my mind wandered, and I interpreted that as a sign that I couldn’t do it.
In both my own and others’ meditation practices, I’ve noticed that the beginning is often rocky and full of doubt, resistance and distraction.
But what seem like impediments can actually enhance meditation practice, because the mental work of handling them builds strength.
For the first six months I meditated, my body and mind were restless. I wanted to get up and do other tasks. But I didn’t. Eventually it became easier to notice my urges and thoughts without acting upon them. I didn’t get as upset with myself.
After about a year of consistent meditation, my mind seemed more organized and controllable; it no longer got stuck in self-critical loops. I felt a sense of kindness or friendliness toward myself in everyday moments, as well as during joyful or difficult experiences. I enjoyed ordinary activities more, such as walking or cleaning.
It took a while to understand that anytime you sit down and try to meditate, that’s meditation. It is a mental process, rather than a destination.
How meditation works on the mind
Just having a general intention to be more mindful or self-compassionate is unlikely to work.
Don’t be discouraged if your mind wanders as you meditate.
Establishing the formal practice
A common misconception about mindfulness is that it’s simply a way to relax or clear the mind. Rather, it means intentionally paying attention to your experiences in a nonjudgmental way.
Consider meditation the formal part of your practice – that is, setting aside a time to work on specific mindfulness and self-compassion techniques.
Cultivating mindfulness with meditation often involves focusing on paying attention to the breath. A common way to start practice is to sit in a comfortable place and bring attention to your breathing, wherever you feel it most strongly.
At some point, probably after a breath or two, your mind will wander to another thought or feeling. As soon as you notice that, you can bring your attention back to the breath and try not to judge yourself for losing focus for five to 10 minutes.
When I was just getting started meditating, I would have to redirect my attention dozens or hundreds of times in a 20-to-30-minute session. Counting 10 breaths, and then another 10, and so on, helped me link my mind to the task of paying attention to my breathing.
The most well-established technique for cultivating self-compassion is called loving-kindness meditation. To practice, you can find a comfortable position, and for at least five minutes, internally repeat phrases such as, “May I be safe. May I be happy. May I be healthy. May I live with ease.”
When your attention wanders, you can bring it back with as little self-judgment as possible and continue repeating the phrases. Then, if you like, offer the same well wishes to other people or to all beings.
Every time you return your focus to your practice without judging, you’re flexing your mental awareness, because you noticed your mind wandered. You also improve your capacity to shift attention, a valuable anti-rumination skill, and your nonjudgment, an antidote to self-criticism.
Mindfulness also occurs when you tune into present-moment sensations, such as tasting your food or washing the dishes.
An ongoing routine of formal and informal practice can transform your thinking. And again, doing it once in a while won’t help as much. It’s like situps: A single situp isn’t likely to strengthen your abdominal muscles, but doing several sets each day will.
When thoughts pop up during meditation, no worries. Just start again … and again … and again.
One final point: Beginning meditators may find that self-criticism gets worse before it gets better.
After years or decades of habitual self-judgment, people often judge themselves harshly about losing focus during meditation. But once students get through the first few weeks of practice, the self-judgment begins to abate, both about meditation and about oneself in general.
As one of my students recently said after several weeks of mindfulness meditation: “I am more stable, more able to detach from unhelpful thoughts and can do all of this while being a little more compassionate and loving toward myself.”
Even as anticipation mounts ahead of the US jobs data due later today, investors may be bracing for more volatility in the week ahead thanks to another round of risk events.
All eyes will be on the incoming US inflation data as well as speeches from financial heavyweights and other risk events which could spark some fresh action across markets.
Monday, May 8
UK bank holiday honouring Charles III coronation
EUR: Germany industrial production, ECB Chief Economist Philip Lane speech
Tuesday, May 9
CHN: China trade, money supply
AUD: Australia consumer confidence
EUR: ECB Chief Economic Philip Lane speech (IMF)
USD: Fed New York President John Williams speech
US President Joe Biden debt ceiling talks
Wednesday, May 10
EUR: Germany April CPI (final)
USD: US April CPI
Thursday, May 11
CNH: China PPI, CPI
GBP: UK BOE rate decision & press conference
USD: US PPI, initial jobless claims
G7 finance ministers meet in Japan
Friday, May 12
GBP: UK Industrial production, Bank of England Chief Economist Huw Pill speech
USD: University of Michigan consumer sentiment, Fed speeches
The April US consumer price index (CPI) report published on Wednesday 10th May will be exactly one week after the Federal Reserve raised rates and signalled a pause in further increases.
Given how Fed Chair Jerome Powell has left the door open to further tightening if incoming economic data warrants, this could add more spice to the report.
Markets are forecasting:
CPI year-on-year (April 2023 vs. April 2022) to rise 5.0% – slowest pace in almost 2 years.
Core CPI year-on-year to cool 5.4% from the 5.6% in the prior month.
CPI month-on-month (April 2023 vs March 2023) to rise 0.4% from 0.1% in the prior month.
Core CPI month-on-month to cool 0.3% from the 0.4% in the prior month.
Ultimately, further evidence of inflation slowing down could reinforce expectations around the Federal Reserve pausing and eventually cutting interest rates. Should inflation remain sticky, this could rekindle bets around the Fed leaving interest rates higher for longer.
Expectations are rising over the Federal Reserve cutting interest rates with the chance of a 25-basis point cut in July currently priced at 53%, according to Fed funds futures! It will be interesting to see how the incoming inflation data shapes market expectations around the central bank’s next move.
With all of the above discussed, here’s how these 3 assets could react to the US CPI report
USD Index
The past few months have been rough and rocky for the dollar as investors weighed the prospects of the Federal Reserve pausing and then eventually cutting interest rates. More pain could be in store for the dollar if US inflation cools more than expected in April.
A soft inflation print may drag the USD Index toward the 100.72 level. Should prices experience a bearish breakout, this could open the doors toward 100.
A sticky inflation print could throw a lifeline to dollar bulls, propelling back above 101.50 with 102.34 acting as a key level of interest.
SPX500_m
After being trapped within a range for the past few weeks, could a breakout be on the horizon for the SPX500_m?
If the inflation numbers beat expectations, this may trigger a bearish breakout on the SPX500_m – taking prices below the 4050-support level.
Should the inflation numbers come in lower than market forecasts, SPX500_m bulls could be injected with renewed confidence as expectations intensify over the Fed ending its rate cycle. This could send the index back toward the 4180 resistance level and beyond.
Gold
It may be wise to fasten your seatbelts for potential volatility on gold due to its high sensitivity to inflation data and US interest rate expectations. The precious metal remains bullish on the daily charts despite prices pulling back from near-record highs.
A soft inflation report could sweeten appetite for the zero-yielding asset as bets rise over the Fed cutting rates in 2023. This development could push the metal back towards the 2023 high of $2063 with bulls eyeing $2070 and the all-time high at $2075.
A stronger-than-expected inflation number could drag gold prices back toward the psychological $2000 level.
The US stock indices fell again Tuesday as the banking crisis continues. The KBW regional banking index fell more than 6% to its lowest level since November 2020. The Dow Jones Index (US30) was down by 1.08%, and the S&P 500 Index (US500) fell by 1.16% at the stock market’s close. The NASDAQ Technology Index (US100) decreased by 1.08% yesterday.
Regional banks fell sharply yesterday as fears of further stress on small lenders persist amid fears that higher interest rates will hurt banks open to long-term assets, including Treasuries and commercial loans.
The US Bureau of Labor Statistics (BLS) showed yesterday that the number of job openings in March fell to 9.590 million, below estimates of 9.775 million, according to the JOLTs report. At the same time, the US Commerce Department reported that manufacturing orders rose by 0.09% from the previous month, exceeding estimates.
Concerns about the economy were exacerbated by new fears that the US could default as early as June 1 if Congress does not raise the debt ceiling. Treasury Secretary Janet Yellen warned Monday that the United States could run out of cash and default on its debt as early as June 1.
Uber (UBER) jumped by 11% after reporting lower-than-expected first-quarter losses and optimistic forecasts.
Equity markets in Europe traded flat on Tuesday. German DAX (DE30) decreased by 1.23%, French CAC 40 (FR40) fell by 1.45% yesterday, Spanish IBEX 35 (ES35) lost 1.72%, British FTSE 100 (UK100) closed on Tuesday down by 1.24%.
The overall inflation rate in the Eurozone rose in April, remaining well above the European Central Bank’s target levels, but the rise in core prices slowed down. The annualized consumer price index rose from 6.9% to 7.0%. Core inflation (which excludes food and energy prices) fell from 5.7% to 5.6%. Instead of providing some clarity as to how much the central bank might raise rates, the latest numbers have only blurred the picture. Market participants are debating whether the ECB will raise rates on Thursday by 50 or 25 basis points. On the one hand, rising overall inflation could prompt hawkish ECB officials to advocate another 0.5% hike. On the other hand, a slowdown in core price growth could shift the balance towards a more dovish stance and lead to a compromise 25 basis point rate hike.
Gold moved back above $2,000 an ounce on Tuesday as talk of a potential US default led investors to look for safe-haven assets. If gold maintains its current upward trend, the spot price could try again to reach an April high of around $2,050 or higher.
Oil fell more than 5% yesterday due to fears of a US default. Now the next step is up to OPEC+. There is a high probability that the cartel will cut its daily production even more. OPEC+ will try by all means to keep oil prices above $80 a barrel.
Asian markets were mostly rising yesterday. Japan’s Nikkei 225 (JP225) gained 0.12%, China’s FTSE China A50 (CHA50) didn’t trade yesterday, Hong Kong’s Hang Seng (HK50) gained 0.20% on the day, India’s NIFTY 50 (IND50) jumped by 0.46%, while Australian S&P/ASX 200 (AU200) showed a negative result of 0.92% decline on Tuesday.
S&P 500 (F) (US500) 4,119.59 −48.28 (−1.16%)
Dow Jones (US30)33,684.53 −367.17 (−1.08%)
DAX (DE40) 15,726.94 −195.44 (−1.23%)
FTSE 100 (UK100) 7,773.03 −97.54 (−1.24%)
USD Index 101.90 −0.25 (−0.25%)
Important events for today:
– New Zealand Unemployment Rate at 01:45 (GMT+3);
– New Zealand RBNZ Gov Orr Speaks at 02:00 (GMT+3);
– Australia Retail Sales (m/m) at 04:30 (GMT+3);
– Eurozone Unemployment Rate (m/m) at 12:00 (GMT+3);
– US ADP Nonfarm Employment Change (m/m) at 15:15 (GMT+3);
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
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