InvestMacro

By JustMarkets

As the stock market closed yesterday, the Dow Jones Index (US30) decreased by 0.01%, while the S&P 500 Index (US500) added 0.37%. The NASDAQ Technology Index (US100) closed positive by 0.95% on Thursday.

The US Federal Reserve Chairman Jerome Powell said Thursday that the Central Bank would raise interest rates at a “cautious pace” as policymakers near the end of their monetary tightening cycle. According to Powell, the “point” of keeping rates unchanged at last week’s Fed meeting was precisely to slow the pace at which the Fed was raising borrowing costs. Investors now expect rate hikes to resume in July, with the Fed possibly assessing the need for further hikes every second meeting. But Powell said he shares his colleagues’ broad economic outlook for moderate economic growth, a slight increase in unemployment, and a slow decline in inflation for the rest of the year.

According to Powell, it was this outlook that made most policymakers feel that one or two more rate hikes would be enough to end the Fed’s battle with inflation. Federal Reserve Chief Michelle Bowman said the US central bank needs to keep raising interest rates to lower inflation, adding her voice to those policymakers who want to resume raising rates after a break in last week’s tightening campaign.

Tesla (TSLA) shares plummeted by 5.5% yesterday, the biggest daily drop in two months. Analysts at Barclays downgraded the company’s stock, citing the fact that the value of the paper has severely departed from its fundamentals and averages (TSLA stock has risen 80% since the beginning of May).

Stock markets in Europe were mostly down yesterday. German DAX (DE30) decreased by 0.22%, French CAC 40 (FR40) was 0.79% lower, Spanish IBEX 35 (ES35) lost 0.76%, and British FTSE 100 (UK100) closed negative by 0.76%.

Norway’s Central Bank raised its key rate by 50 basis points (bps) to a 15-year high of 3.75% on Thursday in a bid to curb inflation and said it is aiming for another rate hike in August, predicting the rate will rise to 4.25% in the fall. Core inflation in Norway rose to 6.7% in May, a record high and above the Central Bank’s forecast of 6.0%.

The Bank of England, citing the resilience of inflation, surprised markets by raising the rate immediately by 50 bps to 5%. Seven representatives out of 9 voted for such a decision. The Bank of England promises to monitor the situation closely and is ready for further monetary policy tightening in case of more sustainable price growth.

The Swiss National Bank (SNB) raised its discount rate by 25 basis points to 1.75%, as expected, while sending a very hawkish signal. Since the central bank expects inflation to remain stable for some time, another 25bp increase is expected in September. The SNB has revised its inflation forecasts. It is expected to average 2.2% in 2023, 2.2% in 2024, and 2.1% in 2025. The SNB also does not expect any slowdown in inflationary pressures and believes that the current situation is likely to continue. This signals growing concern about the long-term prospects for inflation.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.92% for the day, China’s FTSE China A50 (CHA50) and Hong Kong’s Hang Seng (HK50) were not trading, and Australia’s S&P/ASX 200 (AU200) ended the day down by 1.63%. Most Asian stock markets continued to fall on Friday as the Bank of England’s rate hike heightened fears of monetary tightening, while lower consumer inflation in Japan also worsened sentiment.

S&P 500 (F) (US500) 4,381.89 +16.20 (+0.37%)

Dow Jones (US30)33,946.71 −4.81 (−0.014%)

DAX (DE40) 15,988.16 −34.97 (−0.22%)

FTSE 100 (UK100) 7,502.03 −57.15 (−0.76%)

USD Index 102.40 +0.34 (+0.33%)

• – Australia Manufacturing PMI (m/m) at 02:00 (GMT+3);
• – Australia Services PMI (m/m) at 02:00 (GMT+3);
• – Japan National Core Consumer Price Index at 02:30 (GMT+3);
• – Japan Manufacturing PMI (m/m) at 03:30 (GMT+3);
• – Japan Services PMI (m/m) at 03:30 (GMT+3);
• – Singapore Consumer Price Index (m/m) at 08:00 (GMT+3);
• – UK Retail Sales (m/m) at 09:00 (GMT+3);
• – Eurozone German Manufacturing PMI (m/m) at 10:30 (GMT+3);
• – Eurozone German Services PMI (m/m) at 10:30 (GMT+3);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
• – UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
• – UK Services PMI (m/m) at 11:30 (GMT+3);
• – US FOMC Bullard Speaks at 12:15 (GMT+3);
• – US FOMC Bostic Speaks at 15:00 (GMT+3);
• – US Manufacturing PMI (m/m) at 16:45 (GMT+3);
• – US Services PMI (m/m) at 16:45 (GMT+3).

By JustMarkets

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.

By George Prior 

Nigel Farage’s “lies about Brexit” are to blame for the UK’s inflation and it’s “disingenuous” to blame the Bank of England governor, Andrew Bailey, says the CEO of the world’s largest independent financial advisory, asset management and fintech organization.

The damning indictment from Nigel Green of deVere Group comes as the former leader of the UK Independence Party (UKIP) and leader of the Brexit Party-turned-broadcaster hits out at the governor over interest rate hikes, saying “the economic incompetence with which this country is now being led beggars belief.”

The Bank of England on Thursday raised interest rates to 5% the highest in almost 15 years.

The deVere CEO says: “Nigel Farage is doing what Nigel Farage does: creating sensationalist headlines, that are lacking in reality.

“The fact is that his Brexit lies in a large part have caused the sticky inflation that has prompted the Bank of England to raise interest rates further.”

He continues: “All Western countries have seen price hikes in the last two years, but the UK’s inflation is the worst in Western Europe. Why? Brexit – of which Farage was one of the primary architects.

“As someone who runs a global organisation, I can see that Brexit has made almost every economic activity with the EU more onerous and expensive.”

Wage inflation, says Nigel Green, is now a “huge issue” as it has “hit Britain’s labour market.”

He notes: “Brexit’s ending of free movement of people continues to cripple critical parts of the UK economy such as transport, hospitality and retail, and this is fuelling wage inflation, which is a direct reason why the Bank of England is now raising rates.”

Nigel Green concludes: “While the Bank of England might have made mistakes on inflation, it is disingenuous for Nigel Farage to now attack the governor of the central bank as Brexit is a hugely important contributing factor as to why the UK is still battling hot inflation.”

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.

By JustMarkets

The US stock indices closed lower on Wednesday as Federal Reserve Chairman Jerome Powell’s statement to Congress reinforced the central bank’s goal of curbing inflation. Powell said the Fed is at the end of its tightening cycle but also hinted at the possibility of further interest rate hikes at the July meeting. At yesterday’s stock market close, the Dow Jones Index (US30) decreased by 0.30%, and the S&P 500 Index (US500) lost 0.52%. The Technology Index NASDAQ (US100) closed negative by 1.21% on Wednesday. All three major US stock indices declined for the third day straight.

According to the CME FedWatch tool, financial markets are estimating a 72% chance of another 25 basis point interest rate hike at the conclusion of the July meeting.

The Federal Reserve should not raise interest rates any further, or it risks undermining the strength of the US economy, Atlanta Federal Reserve President Rafael Bostic said Wednesday. The policymaker believes the rate should be held at current levels for the rest of the year from now on. Federal Reserve Bank of Chicago President Austen Goolsbee said Wednesday that the US Central Bank needs more clarity on inflation and the labor market trajectory before deciding its next move. This suggests that the Fed no longer has a consensus about the next meeting.

Equity markets in Europe were mostly down yesterday. German DAX (DE30) decreased by 0.55%, French CAC 40 (FR40) lost 0.46%, Spanish IBEX 35 (ES35) added 0.03%, and British FTSE 100 (UK100) closed down by 0.13%.

In the UK, the consumer price level remained at 8.7% (8.4% was expected) in annual terms. At the same time, core inflation rose from 6.8% to 7.1% y/y. The Bank of England will hold a monetary policy meeting today where a 0.25% rate hike is expected, but because of the inflation shock, there may be surprises in the form of a 0.5% hike. Economists believe the Bank of England will raise the rate by 0.25% and point to another hike in August.

The Swiss National Bank (SNB) will also hold a monetary policy and interest rate meeting today. There is almost a 100% chance that the SNB will raise the rate by 0.25%, from 1.5% to 1.75%. Although inflation in Switzerland fell to 2.2% in May, the lowest among advanced economies, the SNB does not believe interest rates are in restrictive territory.

The US corn and soybean prices jumped to multi-month highs, reinforcing expectations that a bad harvest worldwide could reduce demand for biofuels and increase demand for oil.

Asian markets traded yesterday without a single dynamic. Japan’s Nikkei 225 (JP225) gained 0.56% on the day, China’s FTSE China A50 (CHA50) lost 1.00%, Hong Kong’s Hang Seng (HK50) fell by 1.98% on Wednesday, and Australia’s S&P/ASX 200 (AU200) closed negative by 0.58%. Most Asian stocks continued to decline on Thursday, following an overnight decline on Wall Street, as Federal Reserve Chairman Jerome Powell indicated the possibility of further interest rate hikes. But regional trading volumes were limited as China and Hong Kong went on a bank holiday for the rest of the week.

Bank of Japan governor Asahi Noguchi said Thursday that the central bank needs to maintain its ultra-soft policy in the near term to ensure sustainable wage growth.

S&P 500 (F) (US500) 4,365.69 −23.02 (−0.52%)

Dow Jones (US30)33,951.52 −102.35 (−0.30%)

DAX (DE40) 16,023.13 −88.19 (−0.55%)

FTSE 100 (UK100) 7,559.18 −10.13 (−0.13%)

USD Index 102.07 -0.47 (-0.46%)

• – Switzerland SNB Interest Rate Decision at 10:30 (GMT+3);
• – Switzerland SNB Monetary Policy Assessment at 10:30 (GMT+3);
• – Switzerland SNB Press Conference at 11:00 (GMT+3);
• – Norway NB Interest Rate Decision at 11:00 (GMT+3);
• – UK BoE Interest Rate Decision at 14:00 (GMT+3);
• – UK BoE MPC Meeting Minutes at 14:30 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US FOMC Bowman Speaks at 16:55 (GMT+3);
• – US Existing Home Sales (m/m) at 15:30 (GMT+3);
• – US Fed Chair Powell Testifies at 17:00 (GMT+3);
• – US FOMC Mester Speaks at 17:00 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+3);
• – US Crude Oil Reserves (w/w) at 18:00 (GMT+3).

By JustMarkets

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.

By Kurt Eichenwald, The Conversation 

The types of crimes that use drop accounts are multiplying rapidly, but there are ways to decrease your chances of becoming a victim.

• Do not mail checks from anywhere but your local post office. Not even your own mailbox is safe. The best option? Pay bills and send money online.

Protect your identity online by following these steps

• Guard your Social Security number. Never use it on medical forms – if asked, write “available upon request” – for a job interview, when applying for a grocery store reward card or when booking travel. If you believe the number has been compromised, contact the Social Security Administration to get a new one.
• Use only one credit card for online shopping, and never use a debit card.
• Strengthen your online and mobile phone passwords.
• If you don’t expect to apply for a credit card or loan soon, freeze your credit with all three credit rating agencies.
• Check your credit reports.
• Do not respond to preapproved credit card or loan offers delivered by mail, and, to reduce offers, consider opting out of receiving these mailings.
• Shred your financial information; don’t simply throw it out.
• Never give out personal information to anyone contacting you through unsolicited phone calls or emails.

To prevent fraud involving a tax return refund or any other tax issue

• Complete and send in your tax return as early as possible, which makes it more difficult for someone to steal your refund.
• Establish an identity protection PIN with the IRS, which only you and the agency will know.
• If the IRS rejects your attempt to file your tax return, or if you receive any unusual mail from the agency such as a tax transcript you didn’t request, or it notifies you of suspicious activity, contact the agency at the number listed here to report possible identity theft.
• Pay any taxes owed online, not by check.

To prevent losses through business email compromise scams

• Learn and teach employees basic email safety techniques.
• Confirm urgent emails from supervisors or vendors demanding immediate wire transfers. In fact, urgent requests are the most suspicious.
• Assure employees that double-checking whether these purportedly urgent emails came from the listed sender will not result in criticism or punishment.
• Never purchase a gift card requested by a supervisor through email or text.
• Human resources officials should never change bank accounts for direct deposit if employees ask by email or text. Always call to double-check that the request is real.

This article accompanies Heists Worth Billions, an investigation from The Conversation that found criminal gangs using sham bank accounts and secret online marketplaces to steal from almost anyone – and uncovered just how little being done to combat the fraud.

• Behind the scenes of the investigation
• Announcing The Conversation’s new investigative unit

Kurt Eichenwald, Senior Investigative Editor, The Conversation

This article is republished from The Conversation under a Creative Commons license. Read the original article.

By JustMarkets

The US single-family home construction jumped in May to its highest level in more than a year, and the number of permits issued for future construction also rose, indicating that the housing market is not yet feeling the pressure of high-interest rates and increasing the likelihood of another rate hike from the Fed. This sentiment is putting pressure on investors, so the stock market has seen profit-taking.

At the close of the stock market yesterday, the Dow Jones Index (US30) decreased by 0.72%, and the S&P 500 Index (US500) lost 0.47%. The NASDAQ Technology Index (US100) closed negative by 0.16% on Tuesday.

Today, traders will be watching Fed Chairman Jerome Powell’s speech on monetary policy before the US House Finance Committee. Any hawkish statements could intensify the sell-off in stocks.

Equity markets in Europe were mostly down yesterday. German DAX (DE30) decreased by 0.55%, French CAC 40 (FR40) was down by 0.27%, Spanish IBEX 35 (ES35) added 0.13%, British FTSE 100 (UK100) closed negative yesterday by 0.25%.

The Organization for Economic Cooperation and Development forecasts 6.9% annual inflation in Great Britain this year, the highest among all advanced economies. The data indicated continued labor market tightness, strong underlying inflationary pressures, and a mixed but surprisingly steady GDP growth momentum. Economists now expect the Bank of England to extend its tightening cycle and raise interest rates to a higher level than previously expected.

The European Central Bank has completed most of its interest rate hikes, and possible further increases will be less important for fighting inflation than the duration of monetary tightening, Bank of France Governor François Villeroy de Galhau said yesterday. The policymaker’s comments diverged from those of other ECB officials, who warned that a hike may still be needed in the fall.

Asian markets traded yesterday without a single dynamic. Japan’s Nikkei 225 (JP225) increased by 0.06% for the day, China’s FTSE China A50 (CHA50) was down by 0.60%, Hong Kong’s Hang Seng (HK50) lost 1.54% by Tuesday’s end, and Australia’s S&P/ASX 200 (AU200) jumped by 0.86% by the day.

According to current forecasts, the Bank of Japan expects the recent rise in core consumer inflation, driven by rising costs, to decline in the coming months but to recover again due to strong demand and wage growth. Minutes from the Bank of Japan’s April meeting showed that nine of the ten board members were not going to change their ultra-soft policy in the near term.

HSBC on Tuesday lowered its forecast for China’s economic growth this year, citing resistance in the real estate sector and declining business and consumer confidence. The global bank now forecasts that China’s gross domestic product (GDP) will grow by 5.3% in 2023, down from the 6.3% previously expected. Last week, brokerage firms, including JP Morgan and BofA Global Research, lowered their growth forecasts for the country’s economy after the country’s May industrial production and retail sales growth failed to meet forecasts.

S&P 500 (F) (US500) 4,388.71 −20.88 (−0.47%)

Dow Jones (US30)34,053.87 −245.25 (−0.72%)

DAX (DE40) 16,111.32 −89.88 (−0.55%)

FTSE 100 (UK100) 7,569.31 −19.17 (−0.25%)

USD Index 102.54 +0.02 (+0.02%)

• – Japan BoJ Monetary Policy Meeting Minutes (m/m) at 02:50 (GMT+3);
• – UK Consumer Price Index (m/m) at 09:00 (GMT+3);
• – UK Producer Price Index (m/m) at 09:00 (GMT+3);
• – Canada Retail Sales (m/m) at 15:30 (GMT+3);
• – US Fed Chair Powell Testifies at 17:00 (GMT+3);
• – US FOMC Mester Speaks at 23:00 (GMT+3).

By JustMarkets

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.

This economic gauge “dipped back below zero in less than a year”

By Elliott Wave International

In November 2020, when fears were rampant over a second wave of the coronavirus pandemic, the president of the European Central Bank called for economic stimulus (Reuters):

Facing gloomy outlook, Lagarde calls for unlocking EU aid

In December of 2020, what is known as the Next Generation EU package became operational. This economic aid was massive, amounting to more than €2 trillion at current prices.

But you wouldn’t know it by looking at what’s going on in Germany. It took just 24 months for the European Union’s largest economy to resume its decline.

Here’s an overview from the June 2023 Global Market Perspective, a monthly Elliott Wave International publication which covers an array of financial markets:

German manufacturing orders (top left) dipped back below zero in less than a year. Industrial orders (bottom left), which had already rebounded before stimulus was enacted, returned to their old growth rate within 18 months.

Meanwhile, producer prices (middle column) fell to 4% yearly growth in April — down from 46% in August 2022 — while wholesale prices, which tend to lead the consumer-prices indexes, have dipped below zero for the first time since December 2021. … The two ZEW surveys shown in the right column reflect sentiment among institutional investors. Their views about the economy’s current situation (top) and its future growth prospects (bottom) are declining from multi-year highs.

As Bloomberg reported on May 25:

Europe’s Economic Engine Is Breaking Down
Germany is at risk of a long, slow decline — with consequences for the whole of the EU

But what about other major economies in the European Union, as well as Britain?

Indeed, what does the economic picture look like in the world’s two biggest economies, the U.S. and China?

Our Global Market Perspective covers 50-plus financial markets as well as the world’s major economies.

Elliott Wave International’s main way to analyze these 50 financial markets is to employ the Elliott wave model.

If you’d like to get insights into Elliott wave analysis, read Frost & Prechter’s Wall Street classic, Elliott Wave Principle: Key to Market Behavior. Here’s a quote from the book:

The Wave Principle is governed by man’s social nature, and since he has such a nature, its expression generates forms. As the forms are repetitive, they have predictive value.

Sometimes the market appears to reflect outside conditions and events, but at other times it is entirely detached from what most people assume are causal conditions. The reason is that the market has a law of its own. It is not propelled by the external causality to which one becomes accustomed in the everyday experiences of life. The path of prices is not a product of news. Nor is the market the cyclically rhythmic machine that some declare it to be. Its movement reflects a repetition of forms that is independent both of presumed causal events and of periodicity.

The market’s progression unfolds in waves. Waves are patterns of directional movement.

If you’d like to read the entire online version of the book for free, you may do so once you become a member of Club EWI, the world’s largest Elliott wave educational community.

A Club EWI membership is also free and allows for complimentary access to a wealth of Elliott wave resources on investing and trading.

Join Club EWI now by following this link: Elliott Wave Principle: Key to Market Behavior.

By JustMarkets

The US stock indices did not trade yesterday due to the bank holiday.

According to the CME FedWatch tool, there is currently a 74% chance of a 25 basis point rate hike at the Fed’s next meeting in late July. But then the markets see a 78% chance that rates will remain unchanged.

The US Secretary of State Anthony Blinken concluded his visit to Beijing on Monday with a surprise meeting with Chinese President Xi Jinping. The latter stressed the importance of sustained relations between the two countries after a period of simmering tensions. During the meeting at the State Guest House, Xi said that the world needs a “generally stable” Sino-American relationship. Xi Jinping also added that the future and fate of humanity depend on whether the two countries can find the right path. The Chinese foreign minister also urged Washington to abandon the so-called “China threat theory” and lift sanctions against Beijing and no longer stifle China’s technological development.

Stock markets in Europe were mostly down on Monday. German DAX (DE30) decreased by 0.96%, French CAC 40 (FR 40) lost 1.01%, Spanish IBEX 35 (ES35) decreased by 0.66%, and British FTSE 100 (UK100) fell by 0.71% yesterday.

The Eurozone will get its first view of how June is shaping up in terms of economic activity when the PMI data is released on Friday. Last month’s reports were dismal, as surveys showed slower growth in services and sharper declines in manufacturing. On the positive side was a decline in inflation expectations. And so far, there are few signs that activity has increased.

After some unwelcome inflation and wage data, markets now expect the Bank of England to raise rates above 5% in the coming months, even though inflation forecasts point to a marked reduction in price pressures over the summer.

Crude oil prices fell Monday on concerns that a fragile economic recovery in China will hit demand from the world’s biggest crude importer in the second half of the year. But from a broader perspective, the analyst community still expects significant shortages in the coming months.

Uncertainty over interest rate hikes combined with mixed signals of a potential recession this year kept gold in a tight trading range last month. Gold came under pressure after the US Federal Reserve raised its peak rate. Gold has an inverse correlation with the US dollar and government bond yields. Tightening monetary policy tends to push the dollar higher and push government bond yields higher, which is negative for precious metals. But analysts believe that since the US Federal Reserve is at the end of its tightening cycle, gold has a good chance of rising before the end of the year.

Asian markets traded mostly in negative territory yesterday. Japan’s Nikkei 225 (JP225) was down by 1.00% for the day, China’s FTSE China A50 (CHA50) fell by 1.58%, Hong Kong’s Hang Seng (HK50) decreased by 0.64% by Monday’s close, and Australia’s S&P/ASX 200 (AU200) was positive 0.60% by the day.

China cut its benchmark interest rate (LPR) by 10 basis points as Beijing struggled to support the country’s slowing economic recovery. But the move sent a somewhat negative signal to metals markets, given that it underscores the deepening cracks in the Chinese economy, despite the reversal of anti-COVID measures earlier this year.

Reserve Bank of Australia (RBA) Deputy Governor Michelle Bullock said the unemployment rate needs to rise to about 4.5% from its current level of 3.6% to bring the economy back into balance. According to the politician, this will help contain inflation and avoid further rate hikes and a deep recession.

S&P 500 (F) (US500) 4,409.59 0 (0%)

Dow Jones (US30)34,299.12 0 (0%)

DAX (DE40) 16,201.20 −156.43 (−0.96%)

FTSE 100 (UK100) 7,588.48 −54.24 (−0.71%)

USD Index 102.52 +0.28 (+0.27%)

• – China PBoC Loan Prime Rate (m/m) at 04:15 (GMT+3);
• – Australia RBA Meeting Minutes (m/m) at 04:30 (GMT+3);
• – Japan Industrial Production (m/m) at 07:30 (GMT+3);
• – German Producer Price Index (m/m) at 09:00 (GMT+3);
• – Hong Kong Inflation Rate (m/m) at 11:30 (GMT+3);
• – US FOMC Bullard Speaks at 13:30 (GMT+3);
• – US Building Permits (m/m) at 15:30 (GMT+3);
• – US FOMC Williams Speaks at 18:45 (GMT+3).

By JustMarkets

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.