InvestMacro

By JustMarkets

At the close of the stock market yesterday, the Dow Jones Index (US30) increased by 0.43%, while the S&P 500 Index (US500) added 0.57%. The NASDAQ Technology Index (US100) jumped by 0.73% on Thursday.

The US GDP for the first quarter of 2023 rose by 2.6%, indicating a resilient economy. The US jobless claims rose by 7,000 in the last week (forecast 5,000) to 198,000. The level remains extremely low, but analysts predict a sharp increase in the second quarter. Federal Reserve Bank of Richmond President Thomas Barkin said Thursday that he has not yet concluded what rate hike might be appropriate for the May meeting. According to the politician, there is a lot of uncertainty about how the bank situation affects consumer confidence, the business climate, business investment, consumer spending, and the availability of credit.

For now, banking stress in the United States seems to be under control. Leading US banking regulators said Monday that they plan to tell Congress that the overall financial system remains on solid footing, despite recent bank failures. On Tuesday, Michael Barr, the Fed’s vice chairman for oversight, told the Senate Banking Committee that Silicon Valley Bank’s problems stemmed from “terrible” risk management, suggesting it could be an isolated incident.

There are many questions about what will happen to demand and inflation. Federal Reserve Bank of Boston President Susan Collins said in a statement that US inflation remains too high, and recent indicators support the view that more work needs to be done to bring inflation down to the 2% target. Today, the Personal Consumption Expenditures Index will be released in the US, which is on the Fed’s list of monitored inflation indicators. A rise in this indicator could put the panic back into the market as it would indicate sustained inflationary pressures, which would force US Federal Reserve officials to continue raising rates.

Borrowing under the Fed’s Emergency Financing Program, a new emergency lending program launched after the Silicon Valley bank collapse, has gained momentum. Bank funding levels jumped from $10.7B to $64.4B. The new bank financing mechanism allows banks to borrow for up to one year using eligible assets, including any nominal bonds as collateral. The rise in lending signals that banks remain on high alert and are looking to shore up finances to reassure depositors at a time when the White House is calling for stricter regulation. President Joe Biden on Thursday urged regulators to step up oversight of banks, urging them to reinstate rules that the Trump administration repealed.

Stock markets in Europe were mostly up yesterday. Germany’s DAX (DE30) gained 1.23%, France’s CAC 40 (FR40) added 1.06%, Spain’s IBEX 35 (ES35) increased by 1.61%, and the British FTSE 100 (UK100) closed Tuesday up by 0.74%.

The inflation level in European countries is beginning to decline. In Spain, the consumer price index fell sharply from 6% to 3.3% year-over-year. In Germany, inflation fell from 9.2% to 8.3%. Today, inflation data will be released by France (forecast 6.3% to 5.5% y/y) and Italy (forecast 9.1% to 8.2% y/y), and the total figure for the Eurozone will be published afterward. Analysts forecast a decline in consumer prices in Europe from 8.5% to 7.1%. But despite lower inflationary pressures, the ECB still intends to raise interest rates by 0.5% in May.

According to The Daily Telegraph, Britain is about to join the Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP). This Indo-Pacific trade group will give British companies access to tens of millions of new customers and a $10 trillion market.

The US natural gas prices fell by 4% Thursday, once again hitting critical support of $2. Inventory data showed a decline of 47 billion cubic feet of natural gas from storage, compared to a forecast of 55 billion. In other words, more gas remains in storage than previously planned. As a result, supply exceeds demand, which leads to further downward pressure on prices.

Asian markets were mostly on the rise yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.36%, China’s FTSE China A50 (CHA50) gained 1.23%, Hong Kong’s Hang Seng (HK50) added 0.58% on the day, India’s NIFTY 50 (IND50) did not trade, while Australia’s S&P/ASX 200 (AU200) ended Wednesday with a 1.02% gain.

In Japan, the Tokyo Consumer Price Index, considered a leading indicator of overall inflation, fell last month from 3.3% to an annualized 3.2%. The fall in inflation was largely due to government subsidies on electricity prices. Earlier this year, the Japanese government deployed an additional 2 trillion yen to offer subsidies on some utilities to help curb high inflation.

Purchasing managers’ index (PMI) data showed that activity in China’s service sector grew at its fastest pace in 12 years in March, but manufacturing activity slowed from the previous month, indicating an uneven recovery in Asia’s largest economy. The manufacturing sector plays a leading role in China’s economy and faces growing headwinds from sluggish demand overseas.

S&P 500 (F) (US500) 4,050.83 +23.02 (+0.57%)

Dow Jones (US30)32,859.03 +141.43 (+0.43%)

DAX (DE40) 15,328.78 +193.62 (+1.26%)

FTSE 100 (UK100) 7,620.43 +56.16 (+0.74%)

USD Index 102.17 -0.47 (-0.46%)

• – Japan Tokyo Core CPI (m/m) at 02:30 (GMT+2);
• – Japan Unemployment Rate (m/m) at 02:30 (GMT+2);
• – Japan Industrial Production (m/m) at 02:50 (GMT+2);
• – Japan Retail Sales (m/m) at 02:50 (GMT+2);
• – China Manufacturing PMI (m/m) at 04:30 (GMT+2);
• – China Non-Manufacturing PMI (m/m) at 04:30 (GMT+2);
• – UK GDP (q/q) at 09:00 (GMT+2);
• – German Retail Sales at 09:00 (GMT+2);
• – Switzerland Retail Sales at 09:30 (GMT+2);
• – French Consumer Price Index (m/m) at 09:45 (GMT+2);
• – German Unemployment Rate (m/m) at 10:55 (GMT+2);
• – Italian Consumer Price Index (m/m) at 12:00 (GMT+2);
• – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+2);
• – Eurozone Unemployment Rate (m/m) at 12:00 (GMT+2);
• – Canada GDP (m/m) at 15:30 (GMT+2);
• – US Core PCE Price Index (m/m) at 15:30 (GMT+2);
• – US Chicago PMI (m/m) at 16:45 (GMT+2);
• – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+2).

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 Benjamin Park, Sam Houston State University 

During the first weekend of April 2023, the Church of Jesus Christ of Latter-day Saints will hold its semiannual General Conference in Salt Lake City. Tens of thousands of members will attend in person, with millions watching from home.

Over two days, Latter-day Saints – often called “Mormons” – will hear an array of talks from religious leadership. But another speaker will likely be a member of the church’s auditing department, who, if he follows tradition, will state that the institution’s financial activities from the past year were “administered in accordance with Church-approved budgets, accounting practices, and policies.” No further specifics are typically provided.

This yearly ritual may seem striking in the face of the church’s February 2023 agreement to pay a US$5 million fine in a settlement with the U.S. Securities and Exchange Commission. According to its press release, the SEC concluded that the church went to “great lengths” to “obscure” its investment portfolio. A church statement expressed “regret” that its leaders had followed faulty legal counsel and insisted that the fine would be paid through “investment returns” rather than members’ donations.

The settlement came on the heels of other controversies about the church’s taxes and financial portfolio, which journalists and whistleblowers have estimated at around $100 billion.

These revelations have raised questions concerning the ethics of a religious organization amassing such a large amount of wealth, and how it is balanced with charitable giving. But headlines often overlook the long and surprising history of the modern church’s financial success – as well as the continued anxiety surrounding its economic reserves.

Share and share alike

Mormonism was born through the spiritual quest of Joseph Smith, who was raised amid America’s Second Great Awakening during the early 1800s, a period of Christian revivals. His parents were religious seekers who struggled to find a fulfilling church, and tussled with the young country’s financial turbulence. Smith’s father had lost savings in an ill-fated ginseng deal, plunging the family into two decades of poverty.

It is no surprise, then, that when Smith formed his own church, its teachings included a sharp critique of the capitalist system. Early converts to what was originally called the Church of Christ, organized in 1830, were encouraged to consecrate all their goods to their new religious community so it could redistribute resources to those in need.

It was one of many communal experiments Americans attempted during the antebellum period as religious innovators offered alternatives to what they believed was a dangerous and uncaring economic system. Smith’s earliest revelations denounced individualism and urged believers to share their property and resources with one another.

Yet financial difficulties, personal clashes and other challenges doomed the experiment from the start. Within just a few years, the new church’s leaders had already abandoned the consecration ideal. In its stead, Smith directed members to donate “surplus property” to help pay off the group’s immediate debts and then to donate “one tenth of all their interests annually.” This commandment commenced a practice of tithing that still exists today, though it has been interpreted in different ways over the years.

Hardscrabble years

Over the first two decades of the church’s existence, the Latter-day Saints had to relocate their headquarters multiple times – including seven years in Nauvoo, Illinois, a focus of my historical research. By the time the Saints reached Utah’s Great Salt Lake in 1847, leaders and members alike largely embraced the economic system that Smith had previously decried.

A series of national economic crises during the late 19th century further tested the church’s finances and financial ideals. In addition, the government’s decision to prosecute polygamists amid growing criticism of the church’s “plural marriages” crippled the region’s economy until Latter-day Saint leaders renounced the practice in 1890.

Facing financial ruin, the church’s prophet and president in 1899, Lorenzo Snow, urged members to redouble their commitment to tithing. The church formalized its expectation that members donate 10% of their annual income to remain in good standing. To this day, Latter-day Saints are expected to meet with local bishops every year and state that they have paid a full tithe.

By 1907, Snow’s successor, Joseph F. Smith, jubilantly announced that tithing income had paid off all the church’s loans. He even predicted that if the current rate continued, “we expect to see the day when we will not have to ask you for one dollar of donation for any purpose.”

Bust to boom

Donations only increased over the following decades, however, as the church continued to grow rapidly. The prosperity of the 1950s enabled an ambitious construction agenda for the next decade, as the church built over a thousand new meetinghouses and temples for its exploding membership.

Yet high spending, poor financial management and unwise or unlucky investments brought another financial crisis, and the church soon found itself cash-poor. By 1962, the budget had amassed a $32 million deficit. Leaders ceased offering detailed financial reports, which had been inconsistent yet common staples at the church’s General Conference.

Things started looking up the next year when N. Eldon Tanner, a successful Canadian politician and businessman, joined the church’s leadership and modernized its financial structure, investing any surplus. The church was once again on solid financial footing by the end of the 1960s, though it did not resume the release of detailed financial reports. Instead, Tanner empowered a private economic team to continue growing the faith’s portfolio.

Decades of membership growth, tithing donations and lucrative investments resulted in the modern church’s massive accumulation of wealth. This financial success has enabled it to oversee a worldwide church with nearly 17 million members of record, tens of thousands of employees and countless volunteer and charitable programs.

Its investments became so profitable in the early 2000s that, according to the SEC report, church leaders explored ways to shield their success from the public. According to one whistleblower, church authorities feared that greater transparency would discourage members from further tithing.

Giving to God

While the church reports giving over $1 billion in charitable aid last year, some members and observers alike critique leaders for not donating more, given the vast size of its investment portfolio, which is almost twice the size of Harvard’s endowment.

The issue also raises important ethical questions regarding a religious institution’s obligations toward its own members. Should Latter-day Saints, especially those who are struggling financially, still donate a tenth of their income to a church whose reserves are likely deep enough to pay off more than a decade of expenses? The seeming discrepancy between the transparency required of individual members and the church’s own lack of accountability has unsettled some members.

Yet many believers emphasize that their tithing’s purpose is not merely to add to the church’s coffers but to help build the kingdom of God – their donations are primarily offered for spiritual reasons, not worldly ones. And investments are also a safety net for the faith’s growth: Leaders likely hope it can support rapidly growing membership in lower-income countries.

As absurd as it may be to call a $100 billion dollar portfolio a “rainy day” fund, the church’s turbulent history may have led leaders to see it as just that.

About the Author:

Benjamin Park, Associate Professor of History, Sam Houston State University

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

By JustMarkets

The US stock indices rose sharply on Wednesday as concerns about stress in the banking sector eased, while upbeat earnings reports and growing expectations that the Federal Reserve will halt interest rate hikes further boosted sentiment. As the stock market closed yesterday, the Dow Jones Index (US30) increased by 1.00%, and the S&P 500 Index (US500) added 1.42%. The NASDAQ Technology Index (US100) jumped by 1.79%.

Micron Technology Inc (MU) was up more than 7% after the chipmaker predicted that artificial intelligence would significantly boost its sales in 2025. Lululemon Athletica (LULU) Inc’s papers jumped by 12.9% after an optimistic outlook for its annual results, giving the Nasdaq a significant boost.

For now, banking stress in the United States seems to be under control. Leading US banking regulators said Monday that they plan to tell Congress that the overall financial system remains on solid footing, despite recent bank failures. On Tuesday, Michael Barr, the Fed’s vice chairman for oversight, told the Senate Banking Committee that Silicon Valley Bank’s problems stemmed from “terrible” risk management, suggesting it could be an isolated incident.

Canadian Finance Minister Chrystia Freeland’s promise of a fiscally prudent budget in the face of high inflation has disappointed some strategists who had hoped for restrained spending by the government. Analysts said increased spending in Canada’s budget leaves the government with fewer reserves to fight a possible economic downturn, and it could prevent the Bank of Canada from moving to cut interest rates. Analysts are concerned that the deficit, estimated at 43 billion Canadian dollars ($31.7 billion) from 2022-2023, or 1.5% of GDP, is larger than it should be at this stage of the economic cycle.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE30) increased by 1.23%, France’s CAC 40 (FR40) added 1.36%, Spain’s IBEX 35 (ES35) was up by 1.41%, and the British FTSE 100 (UK100) closed up by 1.07%.

ECB spokesman Kazimir said yesterday that the ECB should keep a close eye on the situation and be ready to take any steps to ensure price and financial stability in the Eurozone. For now, the ECB is expected to continue to raise rates aggressively at its next meeting.

Oil rose slightly on Wednesday as supply shortage fears following an unexpected drop in US crude inventories and the halt of oil exports from Iraqi Kurdistan were partially offset by a smaller-than-expected decline in Russian production. Russian oil production fell by about 300,000 BPD in the first three weeks of March, below the planned 500,000 BPD cut. The US crude inventories unexpectedly declined last week, the Energy Information Administration said Wednesday, as refineries ramped up production after the maintenance season and US imports declined.

Asian markets rose steadily yesterday. Japan’s Nikkei 225 (JP225) gained 1.33%, China’s FTSE China A50 (CHA50) added 0.17%, Hong Kong’s Hang Seng (HK50) jumped by 2.06%, India’s NIFTY 50 (IND50) gained 0.76%, and Australia’s S&P/ASX 200 (AU200) ended Wednesday with a 0.23% gain.

Broader Asian stocks rose yesterday as US regulators’ comments confirmed the strength of the banking system and blamed the recent Silicon Valley Bank collapse on mismanagement rather than systemic risk. But most Asian stocks started lower in early trading Thursday, with Chinese indices under pressure over concerns about slowing economic growth and deteriorating Sino-US relations, while Australian shares rose on the prospect of an imminent pause in the Reserve Bank’s rate hike. Analysts lowered their expectations for Australia’s interest rate cap because of signs that inflation has peaked and economic growth has slowed. But the RBA is expected to raise rates one more time before announcing a pause.

Alibaba has announced plans to become a holding company, splitting its divisions into six independent companies. Each of these companies will be able to seek outside financing and will eventually be spun off. Alibaba’s action was seen as reassuring investors and regulators, leading to a jump in stock prices. It is hoped that this could be a sign that the regulatory measures that have dragged down the Chinese economy are ending.

S&P 500 (F) (US500) 4,027.81 +56.54 (+1.42%)

Dow Jones (US30)32,717.60 +323.35 (+1.00%)

DAX (DE40) 15,328.78 +186.76 (+1.23%)

FTSE 100 (UK100) 7,564.27 +80.02 (+1.07%)

USD Index 102.68 +0.25 (+0.24%)

• – Switzerland KOF Leading Indicators (m/m) at 10:00 (GMT+2);
• – Spanish Consumer Price Index (m/m) at 10:00 (GMT+2);
• – German Consumer Price Index (m/m) at 15:00 (GMT+2);
• – US GDP (q/q) at 15:30 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+2);
• – US Treasury Sec Yellen Speaks at 22:45 (GMT+2).

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 JustMarkets

The US indices fell on Tuesday under pressure from rising Treasury yields amid signs that consumers remain optimistic. If the consumer confidence index is rising, it indicates the economy is not all bad, which in turn could increase the likelihood of another rate hike by the US Fed. As the stock market closed yesterday, the Dow Jones Index (US30) decreased by 0.12%, and the S&P 500 Index (US500) fell by 0.16%. The NASDAQ Technology Index (US100) was down by 0.45% on Tuesday.

Shares of Apple (AAPL), Meta Platforms (META), Alphabet (GOOGL), and Microsoft (MSFT) ended the day down, with Microsoft coming under regulatory scrutiny. The German antitrust authority said Tuesday that it is examining Microsoft for potentially anti-competitive practices. Meanwhile, Alibaba (BABA) shares rose more than 14% after detailing plans to split the business into six divisions, each of which could raise outside capital, including through initial public offerings.

Equity markets in Europe were mostly up yesterday. German DAX (DE30) gained 0.09%, French CAC 40 (FR40) added 0.14%, Spanish IBEX 35 (ES35) increased by 0.41%, and British FTSE 100 (UK100) closed up by 0.17% on Tuesday.

European stock indexes rose for a second session on Tuesday, driven by commodities and banking stocks after a deal to buy out a bankrupt Silicon Valley bank raised hopes of containing the banking crisis. Economically sensitive sectors such as oil and gas, mining, and insurance companies were among other growth leaders in Europe.

European Central Bank (ECB) Supervisory Board Chairman Andrea Enria weighed in on further updates to the EU banking system, supporting the need for “strong and demanding supervision,” which he said is needed now more than ever. Another ECB Governing Council spokesman Mario Centeno said Monday that the European Central Bank should consider recent financial market stress when deciding on interest rates. Still, the main task now is to control inflation and bring it down to 2%.

The OPEC+ coalition shows no sign of adjusting oil production ahead of next week’s meeting, sticking to its previously set production plan. OPEC+ leader Saudi Arabia has publicly stated that the 23-nation alliance should maintain stable supplies throughout 2023. Last week, crude oil prices fell to a 15-month low on fears that the economic fallout from the Silicon Valley Bank collapse and the Credit Suisse Group AG takeover would hurt oil demand. But oil prices have since recovered.

Gold is approaching $2,000, even as the US banking crisis subsides. The yellow metal’s behavior suggests that investors don’t think the mini-banking crisis is behind us.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) gained 0.15%, China’s FTSE China A50 (CHA50) gained 0.19%, Hong Kong’s Hang Seng (HK50) ended the day up by 1.11%, India’s NIFTY 50 (IND50) was down by 0.20%, and Australia’s S&P/ASX 200 (AU200) ended Tuesday positive by 1.04%.

Japan’s parliament on Tuesday approved a record budget of 114.38 trillion yen ($870 billion) for the new fiscal year beginning in April to strengthen defense capabilities in the face of security threats from neighbors and to support the economy in fighting inflation. The defense budget will reach 6.82 trillion yen, the largest ever. Prime Minister Fumio Kishida’s government intends to double its annual defense budget from the current 1% to about 2% of the Gross Domestic Product. About one-third of the budget of 114 trillion yen, or 36.89 trillion yen, will be used to cover social welfare costs, as Japan’s population is one of the fastest ageing in the world. Separately, the Cabinet decided to use 2.22 trillion yen ($16.82 billion) of reserve funds for the current fiscal year ending Friday to finance a new package of inflation-reducing measures. Mitsubishi UFJ Research and Consulting estimates that average Japanese households will have to spend 60,000 yen more on food in 2023 than a year earlier, as businesses are expected to raise prices in the coming months.

Australia’s inflation rate has fallen from 7.4% to 6.8% year-on-year. Such data increases the likelihood that the Reserve Bank of Australia will not raise interest rates further and will end its tightening cycle at its next meeting.

S&P 500 (F) (US500) 3,971.27 −6.26 (-0.16%)

Dow Jones (US30)32,394.25 −37.83 (−0.12%)

DAX (DE40) 15,142.02 +14.34 +(0.095%)

FTSE 100 (UK100) 7,484.25 +12.48 (+0.17%)

USD Index 102.43 −0.43 (−0.42%)

• – Australia Consumer Price Index (m/m) at 03:30 (GMT+2);
• – US Pending Home Sales (m/m) at 17:00 (GMT+2);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+2).

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.