InvestMacro

By JustForex

Уesterday, the yield curve for 2- and 10-year bonds approached the close since 2007, with the curve remaining inverted. The widening spread between 2-year and 10-year bonds signals a clear recession warning. “But Q2 results for banks should be solid, as it is too early for banks to make meaningful provisions for potential credit losses in the event of a potential U.S. recession,” Deutsche Bank said in a report.

The Dow Jones index (US30) decreased by 0.62%, and the S&P 500 index (US500) lost 0.92% at the close of trading on Tuesday. The Technology Index NASDAQ (US100) fell by 0.95% yesterday. At the end of the day, all three indices were down.

Citigroup Inc expects the benchmark S&P 500 index (US500) to end the year at 4200 points, below the forecast made by the bank in late June (4700) and well above where it is now. Oppenheimer&Co. remains optimistic about the benchmark index, though last week, it lowered its target price from its previous forecast of 5330 points to 4800. Credit Suisse Group analysts revised their forecast for the S&P 500 Index (US500) to 4300 points at the end of the year. Morgan Stanley strategists expect the S&P 500 (US500) to reach its target of 3400-3500 points in the absence of a confirmed recession. However, if the economy does end up in a recession, the index could fall as low as 3000 points later this year.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE30) gained 0.57% on Tuesday, France’s CAC 40 (FR 40) jumped by 0.80%, Spain’s IBEX 35 (ES35) fell by 0.62%, and the British FTSE 100 (UK100) closed up by 0.18% yesterday.

The euro’s slide towards parity against the dollar was caused by a complex of problems: a different approach of the European Central Bank and the Federal Reserve System, the threat of a serious recession in Europe, and geopolitical uncertainty. Investors will have to reassess the EU’s economic prospects if Russia decides to limit gas supplies to the continent. A potential “dovish” reassessment of expectations on ECB rates could further increase the divergence of Treasury bond yields and other sovereign bonds. It could result in EUR/USD falling well below 1.

Oil fell to a three-month low as fears of a global recession escalated. The Organization of the Petroleum Exporting Countries (OPEC) noted new demand concerns, predicting that oil demand will grow slower in 2023. A rise in infections in China and approaching US inflation data are raising concerns about demand. West Texas Intermediate crude oil lost more than 8% and closed below $96 a barrel for the first time since early April. Money managers became more bearish on the major oil benchmarks, cutting their net long positions last week to their lowest level since 2020. The US lowered its forecast for oil production growth through 2023, citing inflation and labor shortages. Meanwhile, the White House on Monday urged OPEC to produce more oil, saying it believes the group of oil exporters can do so.

Gold prices continue to decline. Gold and silver prices are inversely correlated with the US Dollar Index and US government bond yields. Amid tighter monetary policy, the US Dollar Index is rising along with government bond yields, resulting in selling pressure on gold and silver prices. Many traders think gold is the best hedge against high inflation, but that doesn’t work in current market conditions.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) decreased by 1.77%, Hong Kong’s Hang Seng (HK50) lost 1.32%, and Australia’s S&P/ASX 200 (AU200) was up by 0.06% for the day.

The Central Bank of New Zealand raised its interest rate by 50 basis points to 2.5%. It is the sixth rate increase in a row. At the same time, the RBNZ made it clear that it is still happy with its planned aggressive tightening course. The RBNZ currently plans to raise the rate to 3.5% by the end of this year and to reach 4% by mid-2023.

South Korea’s Central Bank hiked its benchmark interest rate by half a percent to 2.25% on Wednesday, seeking to cut inflation from a 24-year high and balancing fears of a sharp economic slowdown amid falling business activity.

S&P 500 (F) (US500) 3,818.80 −35.63 (−0.92%)

Dow Jones (US30) 30,981.33 −192.51 (−0.62%)

DAX (DE40) 12,905.48 +73.04 (+0.57%)

FTSE 100 (UK100) 7,209.86 +13.27 (+0.18%)

USD Index 108.12 +0.10 (+0.09%)

• – New Zealand RBNZ Interest Rate Decision at 05:00 (GMT+3);
• – New Zealand RBNZ Rate Statement at 05:00 (GMT+3);
• – UK GDP (m/m) at 09:00 (GMT+3);
• – UK Industrial Production (m/m) at 09:00 (GMT+3);
• – UK Manufacturing Production (m/m) at 09:00 (GMT+3);
• – Eurozone German Consumer Price Index (m/m) at 09:00 (GMT+3);
• – Eurozone French Consumer Price Index (m/m) at 09:45 (GMT+3);
• – Eurozone Spanish Consumer Price Index (m/m) at 10:00 (GMT+3);
• – Eurozone Industrial Production (m/m) at 12:00 (GMT+3);
• – US Consumer Price Index (m/m) at 15:30 (GMT+3);
• – Canada BoC Interest Rate Decision at 17:00 (GMT+3);
• – Canada BoC Monetary Policy Report at 17:00 (GMT+3);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
• – Canada BoC Press Conference at 18:00 (GMT+3).

By JustForex

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 JustForex

The US Stock Indices fell on Monday as investors expected a weak reporting season and negative inflation data for June. Despite a strong labor market, investors are still wary of a recession and waiting to hear from company executives about costs, supply chains, and their views on business conditions over the next few months. “There’s nervousness about earnings season and the CPI report, but I think the market has a sense as to what CPI is going to bring this week,” said Robert Pavlik, senior portfolio manager at Dakota Wealth.

As the stock market closed on Monday, the Dow Jones Index (US30) was down 0.52% and the S&P 500 Index (US500) lost 1.15%. Yesterday the Technology Index NASDAQ (US100) decreased by 2.26%. At the end of the day all three indices were on the plus side.

US consumers see inflation continuing to rise in the coming year but expect a more moderate pace over the long term, indicating that inflation expectations remain reasonably resilient, a New York Fed survey showed on Monday. The Fed is expected to raise rates by 75 basis points at its July 26-27 meeting. Fed futures traders are predicting a prime rate hike to 3.50% by March.

Shares of Twitter Inc fell nearly 10% on Monday as the company prepared to sue Ilon Musk for his attempted rejection of a $44 billion private offering.

Stock markets in Europe mostly fell on Monday. Germany’s DAX (DE30) decreased by 1.40%, France’s CAC 40 (FR 40) lost 0.61%, Spain’s IBEX 35 (ES35) decreased by 0.43%, and only the British FTSE 100 (UK100) closed yesterday in the plus 0.01%.

The euro fell to a 20-year low and came close to parity with the dollar. One of the main problems the ECB is dealing with right now is the so-called “fragmentation” problem. It is when bonding yields of Europe’s northern countries are falling, and yields of peripheral countries are rising. The concern is that tighter monetary policy will increase this difference, leading to an unequal financial position in the general market. This split in views could lead to a stronger market reaction to the ECB’s actions. Most recently, Austrian MPC member Holtzman called for the ECB to raise the rate by 125 points over the next two meetings: 30 points in July and 75 points in September.

The largest pipeline, Nord Stream 1, which transports Russian gas to Germany, began its annual maintenance on Monday, and supplies are expected to be halted for ten days.

On the oil market, the situation remains uncertain. On the one hand, supply shortages on the back of high summer demand are pushing oil prices up. On the other hand, the Fed is aggressively raising interest rates, which leads to an increase in the dollar index. Dollar-denominated goods, including oil, are not usually in demand from foreign buyers when the US currency is rising. As a result, oil prices are very volatile right now.

Yesterday, Asian markets were mostly down. Japan’s Nikkei 225 (JP225) increased by 1.11%, Hong Kong’s Hang Seng (HK50) decreased by 2.77%, and Australia’s S&P/ASX 200 (AU200) ended the day down by 1.14%. Asian stocks are also under pressure on the prospect of further monetary tightening by central banks and the renewed outbreak of COVID-19 in China.

Sri Lanka’s parliament will elect a new president on July 20, its speaker said on Monday. During the meeting of party leaders, it is necessary to ensure the formation of a new all-party government according to the constitution.

S&P 500 (F) (US500) 3,854.47 −44.91 (−1.15%)

Dow Jones (US30) 31,175.52 −162.63 (−0.52%)

DAX (DE40) 12,832.44 −182.79 (−1.40%)

FTSE 100 (UK100) 7,196.59 +0.35 (+0.01%)

USD Index 108.25 +1.24 (+1.16%)

• – Japan Producer Price Index (m/m) at 02:50 (GMT+3);
• – German ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – Eurozone EU Economic Forecasts, tentative;
• – UK BoE Gov Bailey Speaks at 20:00 (GMT+3).

By JustForex

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 ForexTime 

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

By Janet Bednarek, University of Dayton 

Though many Americans may associate airport security with 9/11, it was a wave of hijackings in the late 1960s and early 1970s that laid the foundation for today’s airport security protocols.

During that period, a hijacking occurred, on average, once every five days globally. The U.S. dealt with its own spate of mile-high crimes, convincing reluctant government officials and airport executives to adopt the first important airport security protocols.

The subject of a new Netflix docuseries, hijacker D.B. Cooper emerged as something of a folk hero during this era. While other more violent hijackings might have played a bigger role in prompting early airport security measures, it was the saga of Cooper that captured the imagination of the American public – and helped transform the perception of the overall threat hijackings posed to U.S. air travel and national security.

Incidents become impossible to ignore

The first airplane hijacking happened in 1931 in Peru. Armed revolutionaries approached the grounded plane of pilot Byron Richards and demanded that he fly them over Lima so they could drop propaganda leaflets. Richards refused, and a 10-day standoff ensued before he was eventually released.

That remained a somewhat isolated incident until the late 1940s and 1950s, when several people hijacked airplanes to escape from Eastern Europe to the West. In the context of the Cold War, Western governments granted these hijackers political asylum. Importantly, none of the airplanes hijacked were flown by U.S. carriers.

Beginning in the early 1960s, however, hijackers began targeting U.S. airlines. Most of these individuals were Cubans living in the U.S. who, for one reason or another, wished to return to their native land and were otherwise blocked due to the U.S. embargo against Cuba.

U.S. officials responded by officially and specifically making hijacking a federal crime. Though the new law didn’t stop hijackings altogether, the crime remained relatively rare. When they did occur, they usually didn’t involve much violence.

Officials wanted to downplay hijackings as much as possible, and the best way to do this was to simply give the hijacker what they wanted to avert the loss of life. Above all, airline executives wanted to avoid deterring people from flying, so they resisted the implementation of anxiety-inducing security protocols.

That changed in 1968. On July 23 of that year, members of the Popular Front for the Liberation of Palestine hijacked an El Al flight from Rome to Tel Aviv. Though that 39-day ordeal ended without any loss of life, it ushered in a new era of more violent – often politically motivated – hijackings of international airlines.

From 1968 to 1974, U.S. airlines experienced 130 hijackings. Many fell into this new category of politically motivated hijackings, including what has become known as the Dawson’s Field hijackings. In September 1970, the Popular Front for the Liberation of Palestine hijacked four aircraft, including three belonging to U.S. carriers, and forced them to land at Dawson’s Field in Libya. No hostage lives were lost, but the hijackers used explosives to destroy all four aircraft.

Additionally, and more worrying to U.S. officials, two different groups of hijackers, one in 1971 and another in 1972, threatened to crash planes into nuclear power plants.

Cooper inspires copycats

Amid this dramatic rise in the number of hijackings, on Nov. 24, 1971, a man known to the American public as D.B. Cooper boarded a Northwest Orient 727 flight from Portland, Oregon, to Seattle. Shortly after takeoff, he showed a stewardess the contents of his briefcase, which he said was a bomb. He then instructed the stewardess to take a note to the cockpit. In it, he demanded US$200,000 in $20 bills and four parachutes.

Upon arrival in Seattle, Cooper allowed the other passengers to deplane in exchange for the money and the parachutes. Cooper then ordered the pilot to fly to Mexico but low and slowly – no higher than 10,000 feet (3,048 meters) and under 200 knots (230 mph, 370 kph). Somewhere between Seattle and a fuel stop in Reno, Nevada, Cooper and the loot disappeared out the back of the aircraft via the 727’s aft stairwell. No one knows for sure what happened to him, though some of the money was recovered in 1980.

Cooper wasn’t the first person to hijack an American airliner and demand money. That dubious honor belongs to Arthur Barkley. Frustrated with his inability to get government officials to take seriously his dispute with the IRS, on June 4, 1970, Barkley hijacked a TWA aircraft, demanding $100 million and a hearing before the U.S. Supreme Court. Barkley’s efforts failed, and he ended up confined to a mental institution.

The idea that Cooper might have succeeded, however, clearly inspired several imitators. While it remains uncertain whether Cooper lived to enjoy the fruits of his escapade, none of his imitators did. They included Richard McCoy, Jr., Martin J. McNally and Frederick Hahneman, all of whom successfully parachuted out of the aircraft once they received their ransom payments, only to be eventually caught and punished.

Tightening the screws

In response to the spate of more violent and costly hijackings, the U.S. government established the first anti-hijacking security protocols. Most of them aimed to prevent hijackers from getting on aircraft in the first place. The measures included a hijacker profile, metal detectors and X-ray machines. Specific to Cooper, airlines retrofitted aircraft with a devise known as a Cooper vane that made it impossible to open aft stairwells during flight.

The protocols put in place in the 1970s also laid the foundation for the expansive security measures taken after 9/11. A series of court cases upheld the constitutionality of these early measures. For example, United States v. Lopez, decided in 1971, upheld the use of the hijacker profile.

More importantly, in United States v. Epperson, a federal court ruled in 1972 that the government’s interest in preventing hijackings justified the requirement for passengers to pass through a magnetometer at the airport. And in 1973, the Ninth Circuit Court, in United States v. Davis, declared that the government’s need to protect passengers from hijackings rendered all searches of passengers for weapons and explosives as reasonable and legal.

These rulings upholding early anti-hijacking measures helped create the strong legal grounds for the rapid adoption of the more rigorous security protocols – including detailed identification checks, random pat-downs and full body scans – adopted after 9/11.

The mystery surrounding the fate of Cooper may have afforded him an outsized place in American popular culture, but his crime should also be remembered as one in a consequential wave of hijackings that finally forced the U.S. government, airline executives and airport officials to adopt the first versions of the security measures travelers take for granted today.

About the Author:

Janet Bednarek, Professor of History, University of Dayton

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