⚡️🇺🇸☢️🗣 IMF: the U.S. economy has proved resilient in the face of tighter monetary and fiscal policy, but this means that inflation has been more persistent than anticipated.
It forecast the federal funds rate peaking this year at 5.4% - above the nominal 5.25% Fed rate - easing to 4.9% in 2024.
It forecast the federal funds rate peaking this year at 5.4% - above the nominal 5.25% Fed rate - easing to 4.9% in 2024.
⚡️🇺🇸🇨🇳👆☢️ Our hypothesis on China - US confrontation in South China sea is getting more confirmation:
Former US Secretary of State Henry Kissinger said that tensions between Washington and Beijing could escalate into an armed conflict.
"I believe that China, given its power, is a dangerous potential opponent [of the United States] <...> We have two societies with global historical views, but different cultures that compete with each other," he said.
Kissinger stressed that the reason for the conflict could be the "problem" in the South China Sea. In his opinion, if the parties do not find solutions "according to the principle of freedom of the high seas," then collisions cannot be avoided.
Former US Secretary of State Henry Kissinger said that tensions between Washington and Beijing could escalate into an armed conflict.
"I believe that China, given its power, is a dangerous potential opponent [of the United States] <...> We have two societies with global historical views, but different cultures that compete with each other," he said.
Kissinger stressed that the reason for the conflict could be the "problem" in the South China Sea. In his opinion, if the parties do not find solutions "according to the principle of freedom of the high seas," then collisions cannot be avoided.
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☝️☢️🗣 - 🇺🇸🏦The head of the IMF remembered the fairy tale about Cinderella, speaking about the threat of default in the United States.
Kristalina Georgieva said that the United States has several times come to the “edge of the abyss” due to the risk of default, making a decision to avoid it, but they need to speed up and not put off the question: “We have all read the fairy tale about Cinderella. Cinderella must leave the ball at midnight sharp. We've come to this point, so before our carriage turns into a pumpkin, can we please fix this problem? We're not just dealing with the loss of a shoe."
Earlier it became known that the US Treasury moved the expected default date from June 1 to June 5. 🤣
Kristalina Georgieva said that the United States has several times come to the “edge of the abyss” due to the risk of default, making a decision to avoid it, but they need to speed up and not put off the question: “We have all read the fairy tale about Cinderella. Cinderella must leave the ball at midnight sharp. We've come to this point, so before our carriage turns into a pumpkin, can we please fix this problem? We're not just dealing with the loss of a shoe."
Earlier it became known that the US Treasury moved the expected default date from June 1 to June 5. 🤣
🏦🇬🇧🌾 British Prime Minister Rishi Sunak's government is trying to negotiate with supermarkets to impose price caps on staples such as bread and milk to fight inflation.
The proposal comes amid growing government concern over the pressure on household finances due to inflation and rising borrowing costs
The proposal comes amid growing government concern over the pressure on household finances due to inflation and rising borrowing costs
Bloomberg.com
Sunak Looks to Cap Basic Food Prices in Fight Against Inflation
UK Prime Minister Rishi Sunak’s government is seeking an agreement with supermarkets to voluntarily limit prices on basic food items like bread and milk in order to tackle inflation.
⚡️🇺🇸☢️🗣 People in the US start asking correct questions. Everybody remains on its own view, but discussion is not over yet.
The AUKUS strategy slowly but stubbornly shows progress. The article is highly recommended for reading,
The AUKUS strategy slowly but stubbornly shows progress. The article is highly recommended for reading,
Foreign Affairs
Does America Still Need Europe?
Debating an “Asia First” approach.
⚡️🇺🇸☢️🗣 Retailers' inventories returned to pre-pandemic levels already in Q3 2022, which may confirm the thesis about the reasons for the decline in trade through ports.
Wholesalers are really failing, they have another 15 percent of stocks to catch up.
But, in general, it's all about the same thing - gradually the pandemic problems associated with logistics are fading away. In 1H2023, I believe, everything will settle down, and when this disinflationary factor stops working, inflation may creep up.
Wholesalers are really failing, they have another 15 percent of stocks to catch up.
But, in general, it's all about the same thing - gradually the pandemic problems associated with logistics are fading away. In 1H2023, I believe, everything will settle down, and when this disinflationary factor stops working, inflation may creep up.
⚡️🇺🇸☢️🗣 The US Treasury intends to suck under $700 billion from the market in a month.
▪️The last time comparable events took place at the end of 2021-beginning of 2022. The Ministry of Finance then increased the funds in its account with the Fed from $50 to $700+ billion (blue line).
▪️But at the same time, the Fed injected nearly $300 billion into the system (red line). That is, the net was sucked out of the system about 350 billion dollars in 2(!) months and the S & P500 fell by 15%.🔥
🔊Now the Fed is taking $130 billion from the system per month. If in June they continue QT at the same pace, then in total the Fed and the Ministry of Finance will remove $830 billion from the system by the end of June in 1 (!) month. 🔥
That is, 2.5 times more liquidity will be removed from the system and, at the same time, 2 times faster than a year and a half ago.
Something tells me that the S&P500 will also fall, and bond yields will have to rise (and bond prices fall) more than they did then. So that the same banking crisis will be given an additional impetus.🤓
▪️The last time comparable events took place at the end of 2021-beginning of 2022. The Ministry of Finance then increased the funds in its account with the Fed from $50 to $700+ billion (blue line).
▪️But at the same time, the Fed injected nearly $300 billion into the system (red line). That is, the net was sucked out of the system about 350 billion dollars in 2(!) months and the S & P500 fell by 15%.🔥
🔊Now the Fed is taking $130 billion from the system per month. If in June they continue QT at the same pace, then in total the Fed and the Ministry of Finance will remove $830 billion from the system by the end of June in 1 (!) month. 🔥
That is, 2.5 times more liquidity will be removed from the system and, at the same time, 2 times faster than a year and a half ago.
Something tells me that the S&P500 will also fall, and bond yields will have to rise (and bond prices fall) more than they did then. So that the same banking crisis will be given an additional impetus.
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⚡️🇺🇸☢️🗣“We will cut spending by $50 billion and lift the ceiling for two years”
But, as we've said in weekly report - there is a puny problem...
But, as we've said in weekly report - there is a puny problem...
☝️☢️🗣 - 🇺🇸Biden and Speaker of the House McCarthy reached a final agreement on raising the national debt limit, sending it to Congress - press conference of the President of the United States
▪️ Biden: This deal is great news for the American people
▪️ We urged both Houses to pass the agreement.
▪️ The agreement excludes the worst-case scenario - default.
▪️ We didn't compromise on the debt ceiling, but we did compromise on the budget.
▪️ Biden says McCarthy negotiated with him in good faith and kept his word
▪️ Biden-McCarthy deal also provides judicial review protection and expires in 2 years - document
The bill is expected to be passed on Wednesday.
By 2033, the national debt of the United States will reach $50 trillion.
▪️ Biden: This deal is great news for the American people
▪️ We urged both Houses to pass the agreement.
▪️ The agreement excludes the worst-case scenario - default.
▪️ We didn't compromise on the debt ceiling, but we did compromise on the budget.
▪️ Biden says McCarthy negotiated with him in good faith and kept his word
▪️ Biden-McCarthy deal also provides judicial review protection and expires in 2 years - document
The bill is expected to be passed on Wednesday.
By 2033, the national debt of the United States will reach $50 trillion.
☝️☢️🗣 - 🇺🇸Even before this debt ceiling deal, Janet Yellen testified that they expect debt to reach $50 trillion by 2033. $2 trillion a year deficit
Now, after this "deal" with the removal of all restrictions ... probably MUCH earlier. $40 trillion debt by 2026 $50 trillion debt by 2029 Buy hard assets that will have value in the next currency because they destroy this one.🤓
Now, after this "deal" with the removal of all restrictions ... probably MUCH earlier. $40 trillion debt by 2026 $50 trillion debt by 2029 Buy hard assets that will have value in the next currency because they destroy this one.
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🇯🇵☢️👆 Speculators increased their short yen positions to the highest in a year
✔️This is due to both the recent collapse of the Japanese currency and the expectation of an increase in Fed rates.
✔️Recall that the USDJPY rate has an extremely high correlation with the dynamics of Treasury yields.
✔️According to the Commodity Futures Trading Commission in the week ending May 23, hedge funds increased their shorts by 10,986 contracts to 53,706, the highest since last June.
✔️In May, the yen shows the third worst performance among peers in the G10 against the stronger dollar.
✔️This is due to both the recent collapse of the Japanese currency and the expectation of an increase in Fed rates.
✔️Recall that the USDJPY rate has an extremely high correlation with the dynamics of Treasury yields.
✔️According to the Commodity Futures Trading Commission in the week ending May 23, hedge funds increased their shorts by 10,986 contracts to 53,706, the highest since last June.
✔️In May, the yen shows the third worst performance among peers in the G10 against the stronger dollar.
⚡️🇺🇸☢️👆Data on the US labor market can inspire optimism only for officials from the Fed.
American employers are gradually reducing the rate of hiring.
✔️Upcoming data is forecast to show jobs in the world's largest economy increased by less than 200,000 in May, compared to an average monthly job growth of about 370,000 over the past year.
❗️In addition, the report will show the lowest number of open vacancies in two years. While job openings are still about 2 million more than before the pandemic, April's fourth consecutive monthly drop in job openings underscores the gradual deterioration of labor market conditions that fueled inflation last year.
American employers are gradually reducing the rate of hiring.
✔️Upcoming data is forecast to show jobs in the world's largest economy increased by less than 200,000 in May, compared to an average monthly job growth of about 370,000 over the past year.
❗️In addition, the report will show the lowest number of open vacancies in two years. While job openings are still about 2 million more than before the pandemic, April's fourth consecutive monthly drop in job openings underscores the gradual deterioration of labor market conditions that fueled inflation last year.
⚡️☢️🔥🇨🇳Bitcoin is raising on news from Hong Kong
Hong Kong is expected to announce that as early as June, retail investors can trade cryptocurrencies in accordance with new rules for the digital asset industry. - Bloomberg
Hong Kong is expected to announce that as early as June, retail investors can trade cryptocurrencies in accordance with new rules for the digital asset industry. - Bloomberg
Bloomberg.com
Hong Kong Lets Retail Investors Trade Crypto in New Rules
Hong Kong said retail investors can trade crypto under its new rulebook for the sector, stepping up a drive to develop a digital-asset hub even as the industry and regulators clash elsewhere in Asia.
⚡️🇺🇸🇬🇧☢️🗣Barclays:
The minutes from the May meeting turned out to be more "hawkish" than expected. "Several participants noted that additional tightening at the upcoming meetings would be appropriate..." - the protocol says. We expect the Fed to raise its forecast for economic growth, inflation and lower its forecast for unemployment growth. This could lead to an increase in the final rate forecast, even if the Fed does not raise it in June.
source: Barclays Research, 05/24/2023
The minutes from the May meeting turned out to be more "hawkish" than expected. "Several participants noted that additional tightening at the upcoming meetings would be appropriate..." - the protocol says. We expect the Fed to raise its forecast for economic growth, inflation and lower its forecast for unemployment growth. This could lead to an increase in the final rate forecast, even if the Fed does not raise it in June.
source: Barclays Research, 05/24/2023