SOURCE:
Credit Bubble Bulletin
Weekly Commentary
By Doug Noland
June 3, 2022
Following is my edited easy to read version
Ye Editor
For the Week Ending June 3, 2022:
GLOBAL STOCK INDEXES:
S&P500 fell 1.2% (down 13.8% y-t-d)
Dow Industrial declined 0.9% (down 9.5%)
Utilities lost 1.2% (up 2.2%)
Banks slumped 1.7% (down 13.5%)
Transports were unchanged (down 12.3%)
S&P 400 Midcaps dipped 0.7% (down 11.3%)
Small cap Russell 2000 slipped 0.3% (down 16.1%)
Nasdaq100 declined 1.1% (down 23.1%)
Semiconductors fell 1.7% (down 22.4%)
Biotechs dropped 2.6% (down 16.5%)
Though gold bullion slipped $3,
the HUI gold stock index increased 0.7%
(up 1.3%)
U.K.'s FTSE dipped 0.7% (up 2.0% y-t-d)
France's CAC40 slipped 0.5% (down 9.3%)
German DAX little changed (down 9.0%)
Spain's IBEX 35 fell 2.3% (unchanged)
Italy's FTSE MIB slumped 1.9% (down 11.6%)
Brazil's Bovespa declined 0.7% (up 6.0%)
Mexico's Bolsa sank 3.4% (down 4.9%).
South Korea's Kospi rallied 1.2% (down 10.3%)
India's Sensex gained 1.6% (down 4.3%)
Japan's Nikkei rallied 3.7% (down 3.6% y-t-d)
China's Shanghai recovered 2.1% (down 12.2%).
Turkey's Istanbul National 100 surged 6.7% (up 40.0%)
Russia's MICEX sank 4.1% (down 39.1%).
US BONDS:
Three-month Treasury bill rates
ended the week at 1.125%.
Two-year government yields
jumped 18 bps to 2.66% (up 192bps y-t-d).
Five-year T-note yields
surged 22 bps to 2.94% (up 167bps).
Ten-year Treasury yields
rose 20 bps to 2.94% (up 143bps).
Long bond yields
gained 12 bps to 3.09% (up 119bps).
Benchmark Fannie Mae MBS yields
jumped 21 bps to 4.09% (up 202bps).
Federal Reserve Credit last week
contracted $21.7bn to $8.879 TN.
Over the past 142 weeks, Fed Credit
expanded $5.152 TN, or 138%.
US MORTGAGES:
Freddie Mac 30-year fixed mortgage rates
slipped a basis point to 5.09% (up 210bps y-o-y).
Fifteen-year rates
added a basis point to 4.32% (up 205bps).
Five-year hybrid ARM rates
dropped 16 bps to 4.04% (up 140bps).
Jumbo mortgage 30-year fixed rates
up 13 bps to 5.37% (up 225bps).
CURRENCIES:
For the week, the U.S. Dollar Index
gained 0.5% to 102.14 (up 6.8% y-t-d).
The Chinese (onshore) renminbi
increased 0.59% versus the dollar (down 4.57% y-t-d).
COMMODITIES:
Bloomberg Commodities Index
was unchanged (up 34.9% y-t-d).
Spot Gold little changed at $1,851 (up 1.2%).
Silver declined 0.8% to $21.93 (down 5.9%).
Copper jumped 3.8% (unchanged).
WTI crude oil jumped $3.80 to $118.87 (up 58%).
Gasoline surged 5.9% (up 91%),
Natural Gas declined 2.3% (up 129%).
Wheat dropped 10.2% (up 50%)
Corn fell 6.5% (up 23%)
Bitcoin gained $910, or 3.2%, this week
to $29,680 (down 36%).
DOUG NOLAND'S COMMENTARY
(highly edited)
WTI Crude jumped another $3.80 this week to $118.87, the high since the March price spike, and boosting 2022 gains to 71%. Heading into the busy summer driving season, Gasoline futures jumped another 5.9% this week to a record high, while increasing y-t-d gains to 91%. And while Natural Gas declined 2.3%, prices are still up 129% this year.
Copper was up 3.8% this week.
Platinum surged 6.2%,
while lead, nickel, tin and zinc
all posted strong gains.
Now, following the Ukraine/Russia War, “Covid zero” lockdowns and surging worldwide inflationary impulses, a disparate risk profile has emerged. Beijing now appears poised to embark on historic stimulus measures in a world of powerful and increasingly embedded inflationary forces.
Tesla was slammed 9.2% in Friday trading,
with Micron down 7.2%, and Etsy falling 7.2%.
NEWS SUMMARY:
Market Instability Watch:
June 1 – Bloomberg:
“Jamie Dimon warned investors to prepare for an economic ‘hurricane’ as the economy struggles against an unprecedented combination of challenges, including tightening monetary policy and Russia’s invasion of Ukraine. ‘That hurricane is right out there down the road coming our way,’ the JPMorgan… chief executive officer said… ‘We don’t know if it’s a minor one or Superstorm Sandy. You better brace yourself.’”
June 1 – Bloomberg:
“The Federal Reserve is about to start shrinking its $8.9 trillion balance sheet, deploying a second tool along side higher interest rates to curb inflation, though officials don’t know just how effective it will be. After doubling in size through asset purchases in the first two years of the pandemic, the balance sheet will be reduced at a pace that’s almost twice as fast as after the last financial crisis. While the process officially commences on Wednesday, the first US Treasury securities won’t run off until $15 billion mature on June 15. The Fed is capping monthly runoff at $47.5 billion -- $30 billion for Treasuries and $17.5 billion for mortgage-backed securities -- until September. Those thresholds will then double to a combined $95 billion. That compares to a peak of $50 billion a month when the Fed performed the exercise starting in 2017.”
Bursting Bubble / Mania Watch:
June 2 – Reuters:
“U.S. employers in the technology sector cut nearly nine times more jobs in May than in the first four months of the year as rising inflation and slowing demand force companies to cut corners. Though overall layoffs in the country reported by global outplacement firm Challenger, Gray & Christmas on Thursday fell 14.7% in May from April, thanks to strong demand in the labor market, the technology sector cut 4,044 jobs, up from the 459 between January and April. It is the highest monthly total since December 2020…”
Russia / Ukraine War Watch:
May 29 – Reuters:
“The ‘liberation’ of Ukraine's Donbas region is an ‘unconditional priority’ for Moscow, while other Ukrainian territories should decide their future on their own, Russian Foreign Minister Sergei Lavrov said… Lavrov was speaking… with France's TF1 television… as Russia pressed on with its offensive to secure control of key towns in Donbas, Ukraine's traditional industrial heartland made up of the Donetsk and Luhansk regions.”
May 29 – Financial Times:
“Europe’s unity on sanctions against Russia is ‘starting to crumble’, Germany’s economy minister has warned as diplomats highlight continued divisions over a package of sanctions set to be discussed by member states on Monday. Robert Habeck spoke as EU ambassadors meeting in Brussels on Sunday failed to agree on the bloc’s latest package of sanctions against Moscow, including a plan to stop imports of Russian oil which Hungary has been blocking for weeks.”
Economic War / Iron Curtain Watch:
May 30 – Wall Street Journal:
“Across Ukraine, farmers are navigating mines, traversing bombed bridges and risking dangerous maneuvers at overworked ports to circumvent a Russian blockade and get their grains to a world desperate for them. But for all their efforts, Ukraine’s strained infrastructure has little hope of being able to handle the 30 million metric tons of corn, wheat and sunflower oil that is expected after harvesting starts in June… Less than half of that harvest is likely to be exported…, depriving the world of over 8% of all cereal exports and threatening to further stoke food prices and exacerbate shortages. Russia’s seizure of Ukrainian ports and blocking of ships around the Black Sea has closed the route that almost all of Ukraine’s grain would usually take.”
Inflation Watch:
May 31 – Wall Street Journal:
“Car owners need to buckle up: Higher premiums are starting to arrive as insurers get state approval for rate increases to offset inflation and an increase in serious crashes. Rates are rising as much as 20% in some locations, as insurers seek increases to compensate for what they believe will be more sustained inflation.”
June 2 – Yahoo Finance:
“Airline ticket price increases are hitting eye-popping levels as the major airlines look to recoup higher costs for jet fuel and staffing shortages. ‘Yes,’ long-time airline analyst Helane Becker told Yahoo Finance Live when asked if she has been surprised by the ticket price inflation. ‘We have seen a 34% increase [in fares] this year. We forecast 7% in April, May, and June and we seem to be seeing that. Yes, I am surprised they were able to pass that along [to consumers]. Then again, it comes back to very strong demand.’”
U.S. Bubble Watch:
June 3 – Bloomberg:
“US employers hired at a robust clip in May while wage gains held firm, suggesting the economy continues to power forward as the Federal Reserve raises interest rates at a steep pace to tame red-hot inflation. Nonfarm payrolls increased 390,000 last month after a revised 436,000 gain in April… The unemployment rate held at 3.6%, and the labor force participation rate crept higher. The median estimate in a Bloomberg survey of economists called for a 318,000 advance… and for the unemployment rate to fall to 3.5%... Average hourly earnings rose a less-than-forecast 0.3% from April, the same as the previous month. They were up 5.2% from a year earlier, a slowdown from 5.5% in April.”
June 2 – Financial Times:
“Job creation at companies decelerated to the slowest pace of the pandemic-era recovery in May, payroll processing firm ADP reported... Private sector employment rose by just 128,000 for the month, falling well short of the 299,000 Dow Jones estimate and a decline from the downwardly revised 202,000 in April, initially reported as a gain of 247,000. The big drop-off marked the worst month since the massive layoffs in April 2020…”
June 2 – Bloomberg:
“More than half of US small-business owners said they had open positions they could not fill in May, matching the record set in September and highlighting persistent hiring difficulties for firms in an extremely tight labor market. Fifty-one percent of firms had vacancies last month, up four percentage points from April, according to… the National Federation of Independent Business. A near-record 49% of small-business owners said they raised compensation.”
May 31 – CNBC:
“Nationally, home prices were 20.6% higher than they were in March 2021, according to the S&P CoreLogic Case-Shiller Home Price Index. That is higher than the 20% gain in February. The index is a three-month running average ending in March… Regionally, Phoenix slipped from the top gainer spot for the first time in three years, with Tampa, Florida, taking over. Tampa, Phoenix and Miami continued to see the highest annual gains, with increases of 34.8%, 32.4% and 32.0% respectively. Seventeen of the 20 cities reported higher price increases in the year ended in March 2022 versus the year ended in February 2022.”
June 1 – Reuters:
“Mortgage demand slipped to the lowest level since December 2018, even after rates declined slightly last week. Applications for a mortgage to purchase a home fell 1% last week compared with the previous week, according to the Mortgage Bankers Association... Volume was 14% lower than the same week one year ago.”
May 28 – Financial Times:
“The coronavirus pandemic and rising energy prices have left millions of US households in arrears on their electric and gas bills, and some are now about to lose service as moratoria on utility shut-offs expire. More than 20mn households were behind on utility payments worth $23bn at the end of February, nearly double the number behind in 2019, according to the National Energy Assistance Directors Association…”
Economic Disruption Watch:
May 30 – Wall Street Journal:
"In Phoenix, less than half of the public pools are opening because the city can’t hire enough lifeguards, despite offering a $2,500 incentive payment. Trolley lines in coastal Maine that service beaches are shutting down for the summer due to a dearth of drivers. Across the country, restaurants in tourist destinations are operating on limited hours because they don’t have enough staff to stay open longer. The shortages push up labor costs, adding to inflationary pressure on items including airfares and beach menus.”
May 29 – Bloomberg:
“Companies from retailers to manufacturers will hold greater levels of inventory this summer as global supply chain snarls force a shift from a just-in-time mentality to a just-in-case one, according to EmergeVest, a… global investment firm that specializes in logistics. ‘If you’re a retail business, what is more expensive -- to carry some additional inventory or miss out on the sale completely?,’ EmergeVest Chief Executive Officer Heath Zarin said… Zarin said that in Shanghai… as many as 300,000 containers have yet to leave the city’s port. This summer, ocean freight disruptions could be ‘similar, if not worse’ than last year, he added.”
China Watch:
May 30 – Reuters:
“China's factory activity fell at a slower pace in May as COVID-19 curbs in major manufacturing hubs eased, but movement controls continued to weigh on demand and production… The official manufacturing purchasing managers' index (PMI) rose to 49.6 in May from 47.4 in April…, beating forecasts in a Reuters poll for 48.6. China's factory slowdown is affecting production lines in other major Asian economies with both Japan and South Korea reporting sharp declines in output.”
May 31 – Bloomberg:
“A debt crisis in China’s property industry has sparked a record wave of defaults and dragged more developer bonds down to distressed levels. Risks are now spreading to even higher-rated borrowers. A property firm long considered among the nation’s most resilient, Greenland Holdings Corp., shocked investors last week with a proposed dollar-bond payment delay. Earlier this month, China’s fourth-largest developer, Sunac China Holdings Ltd., became one of the biggest to default. That suggested most private Chinese developers face the risk of a missed payment if they can’t access fresh financing… Refinancing in global debt markets is out of the question for many firms after average yields on their junk dollar notes jumped above 20%.”
Central Banker Watch:
May 29 – Financial Times:
“Central banks are raising rates rapidly in the most widespread tightening of monetary policy for more than two decades… Policymakers around the world have announced more than 60 increases in current key interest rates in the past three months… — the largest number since at least the start of 2000.”
Global Bubble and Instability Watch:
June 3 – Bloomberg:
“Toronto home prices fell for the third straight month, as rising interest rates spur an abrupt reversal in a city recently at the heart of one of the world’s hottest housing markets. The average selling price for a home in Canada’s largest city fell 3.1% in May to C$1.18 million (about $938,000) on a seasonally-adjusted basis…”
Europe Watch:
May 30 – Bloomberg:
“German inflation hit another all-time high, adding urgency to the European Central Bank’s exit from crisis-era stimulus after numbers from Spain also topped economists’ estimates. Driven by soaring energy and food costs…, consumer prices in the continent’s biggest economy jumped 8.7% from a year ago in May. Analysts surveyed by Bloomberg predicted an 8.1% advance. The report comes just 10 days before a crucial ECB meeting…”
May 31 – Associated Press:
“Eurozone inflation hit a record 8.1% in May amid surging energy and food costs fueled in part by Russia’s war in Ukraine. Annual inflation in the 19 countries that use the euro currency soared past the previous record of 7.4% reached in March and April… Inflation in the eurozone is now at its highest level since recordkeeping for the euro began in 1997... Energy prices jumped 39.2%...”
June 2 – Financial Times:
“Eurozone producer prices have surged at the fastest pace since the launch of the single currency more than two decades ago, prompting central bankers to warn that inflationary pressures are becoming too broad as well as too high. Prices charged by industrial producers in the 19 countries that share the euro rose 37.2% in the year to April, up from March’s all-time high of 36.9%, with wholesale prices of consumer goods such as food and drink contributing to the surge…”
May 31 – Reuters:
“France's economy shrank unexpectedly in the first quarter as consumers struggled to cope with surging inflation… The… euro zone's second-biggest economy contracted 0.2% in the three months through March from the previous quarter.”
EM Bubble Watch:
June 3 – Reuters:
“Turkey's annual inflation rate jumped to a 24-year high of 73.5% in May, fuelled by the war in Ukraine, rising energy prices and a tumbling lira -- though the figure was slightly lower than economists had feared. Inflation has surged since last autumn, when the lira slumped after the central bank launched a 500 basis-point easing cycle sought by President Tayyip Erdogan. The latest figure surpassed the 73.2% touched in 2002 and is the highest since October 1998…”
Geopolitical Watch:
May 30 – Reuters:
“Taiwan… reported the largest incursion since January by China's air force in its air defence zone, with the island's defence ministry saying Taiwanese fighters scrambled to warn away 30 aircraft in the latest uptick in tensions… The latest Chinese mission included 22 fighters, as well as electronic warfare, early warning and antisubmarine aircraft, the Taiwan ministry said.”
May 29 – Reuters:
“Turkish President Tayyip Erdogan said talks with Finland and Sweden about their joining NATO were not at the ‘expected level’ and Ankara cannot say yes to ‘terrorism-supporting’ countries… Turkey has objected to Sweden and Finland joining the Western defence alliance, holding up a deal… Erdogan's latest comments indicated his opposition continued. ‘For as long as Tayyip Erdogan is the head of the Republic of Turkey, we definitely cannot say 'yes' to countries which support terrorism entering NATO,’ he was cited as telling reporters…”
June 1 – Bloomberg:
“The Federal Reserve is about to start shrinking its $8.9 trillion balance sheet, deploying a second tool along side higher interest rates to curb inflation, though officials don’t know just how effective it will be. After doubling in size through asset purchases in the first two years of the pandemic, the balance sheet will be reduced at a pace that’s almost twice as fast as after the last financial crisis. While the process officially commences on Wednesday, the first US Treasury securities won’t run off until $15 billion mature on June 15. The Fed is capping monthly runoff at $47.5 billion -- $30 billion for Treasuries and $17.5 billion for mortgage-backed securities -- until September. Those thresholds will then double to a combined $95 billion. That compares to a peak of $50 billion a month when the Fed performed the exercise starting in 2017.”
Bursting Bubble / Mania Watch:
June 2 – Reuters:
“U.S. employers in the technology sector cut nearly nine times more jobs in May than in the first four months of the year as rising inflation and slowing demand force companies to cut corners. Though overall layoffs in the country reported by global outplacement firm Challenger, Gray & Christmas on Thursday fell 14.7% in May from April, thanks to strong demand in the labor market, the technology sector cut 4,044 jobs, up from the 459 between January and April. It is the highest monthly total since December 2020…”
Russia / Ukraine War Watch:
May 29 – Reuters:
“The ‘liberation’ of Ukraine's Donbas region is an ‘unconditional priority’ for Moscow, while other Ukrainian territories should decide their future on their own, Russian Foreign Minister Sergei Lavrov said… Lavrov was speaking… with France's TF1 television… as Russia pressed on with its offensive to secure control of key towns in Donbas, Ukraine's traditional industrial heartland made up of the Donetsk and Luhansk regions.”
May 29 – Financial Times:
“Europe’s unity on sanctions against Russia is ‘starting to crumble’, Germany’s economy minister has warned as diplomats highlight continued divisions over a package of sanctions set to be discussed by member states on Monday. Robert Habeck spoke as EU ambassadors meeting in Brussels on Sunday failed to agree on the bloc’s latest package of sanctions against Moscow, including a plan to stop imports of Russian oil which Hungary has been blocking for weeks.”
Economic War / Iron Curtain Watch:
May 30 – Wall Street Journal:
“Across Ukraine, farmers are navigating mines, traversing bombed bridges and risking dangerous maneuvers at overworked ports to circumvent a Russian blockade and get their grains to a world desperate for them. But for all their efforts, Ukraine’s strained infrastructure has little hope of being able to handle the 30 million metric tons of corn, wheat and sunflower oil that is expected after harvesting starts in June… Less than half of that harvest is likely to be exported…, depriving the world of over 8% of all cereal exports and threatening to further stoke food prices and exacerbate shortages. Russia’s seizure of Ukrainian ports and blocking of ships around the Black Sea has closed the route that almost all of Ukraine’s grain would usually take.”
Inflation Watch:
May 31 – Wall Street Journal:
“Car owners need to buckle up: Higher premiums are starting to arrive as insurers get state approval for rate increases to offset inflation and an increase in serious crashes. Rates are rising as much as 20% in some locations, as insurers seek increases to compensate for what they believe will be more sustained inflation.”
June 2 – Yahoo Finance:
“Airline ticket price increases are hitting eye-popping levels as the major airlines look to recoup higher costs for jet fuel and staffing shortages. ‘Yes,’ long-time airline analyst Helane Becker told Yahoo Finance Live when asked if she has been surprised by the ticket price inflation. ‘We have seen a 34% increase [in fares] this year. We forecast 7% in April, May, and June and we seem to be seeing that. Yes, I am surprised they were able to pass that along [to consumers]. Then again, it comes back to very strong demand.’”
U.S. Bubble Watch:
June 3 – Bloomberg:
“US employers hired at a robust clip in May while wage gains held firm, suggesting the economy continues to power forward as the Federal Reserve raises interest rates at a steep pace to tame red-hot inflation. Nonfarm payrolls increased 390,000 last month after a revised 436,000 gain in April… The unemployment rate held at 3.6%, and the labor force participation rate crept higher. The median estimate in a Bloomberg survey of economists called for a 318,000 advance… and for the unemployment rate to fall to 3.5%... Average hourly earnings rose a less-than-forecast 0.3% from April, the same as the previous month. They were up 5.2% from a year earlier, a slowdown from 5.5% in April.”
June 2 – Financial Times:
“Job creation at companies decelerated to the slowest pace of the pandemic-era recovery in May, payroll processing firm ADP reported... Private sector employment rose by just 128,000 for the month, falling well short of the 299,000 Dow Jones estimate and a decline from the downwardly revised 202,000 in April, initially reported as a gain of 247,000. The big drop-off marked the worst month since the massive layoffs in April 2020…”
June 2 – Bloomberg:
“More than half of US small-business owners said they had open positions they could not fill in May, matching the record set in September and highlighting persistent hiring difficulties for firms in an extremely tight labor market. Fifty-one percent of firms had vacancies last month, up four percentage points from April, according to… the National Federation of Independent Business. A near-record 49% of small-business owners said they raised compensation.”
May 31 – CNBC:
“Nationally, home prices were 20.6% higher than they were in March 2021, according to the S&P CoreLogic Case-Shiller Home Price Index. That is higher than the 20% gain in February. The index is a three-month running average ending in March… Regionally, Phoenix slipped from the top gainer spot for the first time in three years, with Tampa, Florida, taking over. Tampa, Phoenix and Miami continued to see the highest annual gains, with increases of 34.8%, 32.4% and 32.0% respectively. Seventeen of the 20 cities reported higher price increases in the year ended in March 2022 versus the year ended in February 2022.”
June 1 – Reuters:
“Mortgage demand slipped to the lowest level since December 2018, even after rates declined slightly last week. Applications for a mortgage to purchase a home fell 1% last week compared with the previous week, according to the Mortgage Bankers Association... Volume was 14% lower than the same week one year ago.”
May 28 – Financial Times:
“The coronavirus pandemic and rising energy prices have left millions of US households in arrears on their electric and gas bills, and some are now about to lose service as moratoria on utility shut-offs expire. More than 20mn households were behind on utility payments worth $23bn at the end of February, nearly double the number behind in 2019, according to the National Energy Assistance Directors Association…”
Economic Disruption Watch:
May 30 – Wall Street Journal:
"In Phoenix, less than half of the public pools are opening because the city can’t hire enough lifeguards, despite offering a $2,500 incentive payment. Trolley lines in coastal Maine that service beaches are shutting down for the summer due to a dearth of drivers. Across the country, restaurants in tourist destinations are operating on limited hours because they don’t have enough staff to stay open longer. The shortages push up labor costs, adding to inflationary pressure on items including airfares and beach menus.”
May 29 – Bloomberg:
“Companies from retailers to manufacturers will hold greater levels of inventory this summer as global supply chain snarls force a shift from a just-in-time mentality to a just-in-case one, according to EmergeVest, a… global investment firm that specializes in logistics. ‘If you’re a retail business, what is more expensive -- to carry some additional inventory or miss out on the sale completely?,’ EmergeVest Chief Executive Officer Heath Zarin said… Zarin said that in Shanghai… as many as 300,000 containers have yet to leave the city’s port. This summer, ocean freight disruptions could be ‘similar, if not worse’ than last year, he added.”
China Watch:
May 30 – Reuters:
“China's factory activity fell at a slower pace in May as COVID-19 curbs in major manufacturing hubs eased, but movement controls continued to weigh on demand and production… The official manufacturing purchasing managers' index (PMI) rose to 49.6 in May from 47.4 in April…, beating forecasts in a Reuters poll for 48.6. China's factory slowdown is affecting production lines in other major Asian economies with both Japan and South Korea reporting sharp declines in output.”
May 31 – Bloomberg:
“A debt crisis in China’s property industry has sparked a record wave of defaults and dragged more developer bonds down to distressed levels. Risks are now spreading to even higher-rated borrowers. A property firm long considered among the nation’s most resilient, Greenland Holdings Corp., shocked investors last week with a proposed dollar-bond payment delay. Earlier this month, China’s fourth-largest developer, Sunac China Holdings Ltd., became one of the biggest to default. That suggested most private Chinese developers face the risk of a missed payment if they can’t access fresh financing… Refinancing in global debt markets is out of the question for many firms after average yields on their junk dollar notes jumped above 20%.”
Central Banker Watch:
May 29 – Financial Times:
“Central banks are raising rates rapidly in the most widespread tightening of monetary policy for more than two decades… Policymakers around the world have announced more than 60 increases in current key interest rates in the past three months… — the largest number since at least the start of 2000.”
Global Bubble and Instability Watch:
June 3 – Bloomberg:
“Toronto home prices fell for the third straight month, as rising interest rates spur an abrupt reversal in a city recently at the heart of one of the world’s hottest housing markets. The average selling price for a home in Canada’s largest city fell 3.1% in May to C$1.18 million (about $938,000) on a seasonally-adjusted basis…”
Europe Watch:
May 30 – Bloomberg:
“German inflation hit another all-time high, adding urgency to the European Central Bank’s exit from crisis-era stimulus after numbers from Spain also topped economists’ estimates. Driven by soaring energy and food costs…, consumer prices in the continent’s biggest economy jumped 8.7% from a year ago in May. Analysts surveyed by Bloomberg predicted an 8.1% advance. The report comes just 10 days before a crucial ECB meeting…”
May 31 – Associated Press:
“Eurozone inflation hit a record 8.1% in May amid surging energy and food costs fueled in part by Russia’s war in Ukraine. Annual inflation in the 19 countries that use the euro currency soared past the previous record of 7.4% reached in March and April… Inflation in the eurozone is now at its highest level since recordkeeping for the euro began in 1997... Energy prices jumped 39.2%...”
June 2 – Financial Times:
“Eurozone producer prices have surged at the fastest pace since the launch of the single currency more than two decades ago, prompting central bankers to warn that inflationary pressures are becoming too broad as well as too high. Prices charged by industrial producers in the 19 countries that share the euro rose 37.2% in the year to April, up from March’s all-time high of 36.9%, with wholesale prices of consumer goods such as food and drink contributing to the surge…”
May 31 – Reuters:
“France's economy shrank unexpectedly in the first quarter as consumers struggled to cope with surging inflation… The… euro zone's second-biggest economy contracted 0.2% in the three months through March from the previous quarter.”
EM Bubble Watch:
June 3 – Reuters:
“Turkey's annual inflation rate jumped to a 24-year high of 73.5% in May, fuelled by the war in Ukraine, rising energy prices and a tumbling lira -- though the figure was slightly lower than economists had feared. Inflation has surged since last autumn, when the lira slumped after the central bank launched a 500 basis-point easing cycle sought by President Tayyip Erdogan. The latest figure surpassed the 73.2% touched in 2002 and is the highest since October 1998…”
Geopolitical Watch:
May 30 – Reuters:
“Taiwan… reported the largest incursion since January by China's air force in its air defence zone, with the island's defence ministry saying Taiwanese fighters scrambled to warn away 30 aircraft in the latest uptick in tensions… The latest Chinese mission included 22 fighters, as well as electronic warfare, early warning and antisubmarine aircraft, the Taiwan ministry said.”
May 29 – Reuters:
“Turkish President Tayyip Erdogan said talks with Finland and Sweden about their joining NATO were not at the ‘expected level’ and Ankara cannot say yes to ‘terrorism-supporting’ countries… Turkey has objected to Sweden and Finland joining the Western defence alliance, holding up a deal… Erdogan's latest comments indicated his opposition continued. ‘For as long as Tayyip Erdogan is the head of the Republic of Turkey, we definitely cannot say 'yes' to countries which support terrorism entering NATO,’ he was cited as telling reporters…”
Climate and Energy News:
https://elonionbloggle.blogspot.com/2022/06/climate-and-energy-news-summary-of-last.html
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