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Inflation fails to revive demand as US economy faces challenges. "Bringing Demand Forward" through low interest rates and credit expansion is no longer effective. Speculative bubbles burst, credit tightens, and consumers struggle under debt. The Everything Bubble is deflating, leaving households with limited purchasing power. Risk mitigation measures are necessary as economies stagnate.
UK Inflation Shock: Core CPI at 30-Year High, Driven by Services Spike, Despite Plunging FuelJun 21, 2023 - 12:14:16 PDT
UK experiences a shocking surge in inflation. Core CPI spikes by 0.8% in May, marking the highest increase since 1992. Services sector hit hard, while food inflation remains high. Motor fuel prices plunge. Overall CPI jumps by 8.7%. Inflationary pressures persist globally.
Jun 21, 2023 - 12:08:38 PDT
Fed Chief Powell acknowledges the need to update liquidity regulation. However, critics argue the entire Fed's thinking is flawed, relying on ineffective economic models. Calls for genuine banking reforms and recognition of AI's superiority in forecasting. Bias-free approaches prove more successful.
US Treasury Secretary Janet Yellen to desperately plead for action at debt summit, as low-income nations face mounting burdens. Bleak warnings of climate crisis and economic fragility loom large. Calls for elusive solutions and uncertain private sector involvement. Debt restructuring efforts offer faint hope. Gloomy outlook overshadows bilateral meetings.
Jun 21, 2023 - 11:51:27 PDT
US national debt has surged by over half a trillion dollars in two weeks, reaching $32.03 trillion. Interest payments exceed $2 billion per day, and experts predict the problem to worsen, potentially reaching $50 trillion. The escalating debt crisis raises concerns about repayment and signals a looming downturn. Prominent figures warn of an imminent late-cycle debt crisis, urging caution and action.
US federal debt is spiraling out of control, heralding a gloomy future of increased taxes, stunted growth, and weakened real wages. Confidence in public finances is waning, jeopardizing the country's economic stability. Urgent action is needed to curb spending and protect the currency's reserve status. Ignoring the warning signs will lead to a disastrous fiscal crisis for future generations.
The commercial real estate sector is facing a gloomy outlook globally, with investors bracing for the next crisis. The end of cheap borrowing has triggered a series of challenges, affecting office buildings and shopping malls in different regions. There is a growing risk of a widespread shakeout, which could disrupt the industry's lenders and leave city centers scarred with empty properties.
Jun 21, 2023 - 07:42:11 PDT
Foreclosure rates surged in Illinois, Maryland, and New Jersey, with Florida facing the highest vulnerability. Completed foreclosures in May increased by 38% from April and 41% from last year. Lenders initiated proceedings on nearly 23,250 homes. Homeowners struggling to make up missed payments face difficulties.
Wall Street investors are retreating from the residential housing market as institutional firms bought significantly fewer homes in the first two months of this year compared to 2022. The financial return on additional homes is unimpressive due to interest rates, house prices, and rents. There are concerns that national house prices will decline further.
Tech giants like Google and Meta Platforms are rapidly shedding office space and reevaluating their workplace strategies, resulting in reduced corporate footprints in Northern California towns. Layoffs and the adoption of hybrid work patterns have contributed to this trend, as companies reconsider their commitments to traditional office spaces.
Jun 21, 2023 - 07:29:22 PDT
The good news? Mortgage purchase demand fell only -0.05% from last week. The bad news? Mortgage purchase demand is down -35% since Resident Biden was sworn in. And mortgage refinancing demand is do…
This analysis focuses on gold and silver within the Comex/CME futures exchange. See the article What is the Comex? for more detail. The charts and tables below specifically analyze the physical stock/inventory data at the Comex to show the physical movement of metal into and out of Comex vaults.
Another state has taken action hoping to hinder the implementation of a central bank digital currency (CBDC) in the United States.Last week, Alabama Governor Kay Ivey signed a bill into law that pushes back against CBDC in a small way that could place some roadblocks in the path toward implementing a digital dollar.
Powell's gloomy prepared remarks highlight the ongoing struggle to curb inflation, with interest rates expected to rise further. Slower economic growth and potential labor market softening will be necessary to reduce inflation, while tighter credit conditions pose significant headwinds to economic activity, hiring, and inflation. The road ahead remains uncertain and challenging.
Gold prices were slightly lower as the dollar strengthened, but cautious remarks from Federal Reserve Chair Jerome Powell could provide support and push prices higher towards the resistance level of $1,985. The focus is on reducing inflation, and expectations of a rate hike in July are boosting the opportunity cost of holding non-yielding assets like gold. A breakout from the consolidation zone will determine the short-term direction of gold.
Money-market funds are reducing their cash holdings in a Federal Reserve borrowing program, indicating that market disruptions have been avoided despite efforts to replenish government coffers after the debt-ceiling fight. This comes as the central bank's reverse repo falls below $2 trillion for the first time in over a year. Despite the recent collapse of Silicon Valley Bank, bonds are still seen as a viable investment, as explained by the Wall Street Journal.
The US money-market industry is thriving with assets growing by approximately $1 trillion in the past year to reach a record of almost $5.5 trillion. It benefits from increased tools to attract investors and expand its cash reserves. With access to higher-yielding assets and improved clarity on the Fed's trajectory, money funds can pursue longer-maturity investments and achieve higher returns.
Last week, the national debt pushed above $32 trillion. This is a ticking time bomb that will eventually explode.
Bitcoin Hits a Six-Week High as Financial Titans Step Up Crypto InitiativesJun 21, 2023 - 06:00:27 PDT
Bitcoin surged to its highest level since early May, driven by increased institutional demand and positive developments in the traditional financial sector. The largest cryptocurrency climbed as much as 3.6% and was trading at $28,988 as of 7:48 a.m. in New York on Wednesday, marking a 74% rebound since the beginning of the year. Other cryptocurrencies like Ether, Cardano, and Solana also experienced gains.
Goldman Sachs suggests hedging S&P 500 rally amid recession risks. Narrow rally, high valuations, and overly optimistic growth expectations prompt caution. Options market can hedge potential 23% downside in recession scenario. Chance of recession over next 12 months estimated at one in four. Despite warnings, Goldman's base case is for S&P 500 to reach 4,500 by year-end.