Creeping Inflation – Thunder From Under http://thunderfromunder.com/ Thu, 22 Jul 2021 16:55:39 +0000 en-US hourly 1 https://wordpress.org/?v=5.8 http://thunderfromunder.com/wp-content/uploads/2021/04/thunder-from-under-icon.png Creeping Inflation – Thunder From Under http://thunderfromunder.com/ 32 32 Optimism is here to stay http://thunderfromunder.com/optimism-is-here-to-stay/ Thu, 22 Jul 2021 10:53:31 +0000 http://thunderfromunder.com/optimism-is-here-to-stay/

Stock markets once again made small gains on Thursday as investors continue to reap the rewards of staying positive despite Monday’s worrying sell-off.

The European indices are all making decent gains, with the FTSE rising above 7,000 despite underperforming the rest of the region. It looks like investors are yet to buy into Monday’s grim tale that the recent surge in delta cases will weigh on the recovery in the last quarter.

Instead, bullish earnings reports give investors a sense of optimism, and while disruption is likely due to the upside, belief remains that the best is yet to come. Whether that continues if countries impose tighter restrictions is another thing, but for now, optimism remains.

A game changer for the ECB?

The ECB meeting has probably been the most anticipated event this week, but it looks unlikely to be a game-changer the bloc needs. While inflation has returned this year, its sustainability is open to debate and is expected to fall back over time, again leaving the ECB below its target.

The strategic review was clearly aimed at resolving the persistent problem of significantly under-exceeding its inflation target for more than a decade. I’m just wondering if the changes to his mandate will make a difference. This may allow for a bit more easing that could weigh on the currency, but whether it will actually make a difference is another thing.

Not to mention the question of how many exceedances the committee will tolerate if that moment were to come and for how long. The adjustments made by the central bank seem to me to be very minor in reality. The central bank’s reaction today and at its next meeting in September will tell us a lot more about whether this is the game-changing moment or just the same old ECB.

Oil on the rise to improve optimism

Oil is enjoying another day in the green as WTI is firmly back above $ 70 and the mid-July malaise seems to be behind us. Climbing back above $ 70 so quickly after Monday’s sell-off was impressive and says a lot about how traders view dips, which can be applied more broadly to risky assets.

Even China’s reported efforts to take the breath away from the rise in oil prices appear to be failing, with crude only about 5% since its peak in early July. The recovery trade is clearly still on the move and prices are expected to stay high for some time.

Gold falls under pressure from rising yields

Gold is slightly lower in these risky markets, with the yellow metal falling below $ 1,800. Overall, not much has changed, it continues to consolidate around $ 1,800 and shows little sign of bursting either way. Should we continue to see a risk appetite that may change, with the focus remaining on US yields continuing to climb. The US 10-year is approaching 1.3% and could target 1.4% soon. A move above here would be bad news for gold.

Super Elon

Elon has come to Bitcoin’s rescue once again, helping to protect the high-profile $ 30,000 level and spur a strong rally in cryptos. I’m sure crypto enthusiasts around the world were hoping Musk’s appearance at the B Word conference would stop the prices from falling and they won’t be disappointed.

In stating that he personally owns bitcoin, ethereum, and dogecoin, and that Tesla would likely accept bitcoin again, after reversing the decision a few months ago, Musk told the public exactly what he wanted to hear. Obviously, his voice is more powerful than ever and in the future when Elon speaks, the crypto universe will be tuned in.

Source link

]]>
The virus is skyrocketing and yields are dropping; is inflation already yesterday’s news? http://thunderfromunder.com/the-virus-is-skyrocketing-and-yields-are-dropping-is-inflation-already-yesterdays-news/ Wed, 21 Jul 2021 09:42:18 +0000 http://thunderfromunder.com/the-virus-is-skyrocketing-and-yields-are-dropping-is-inflation-already-yesterdays-news/

The last time there was so much panic in the markets over higher inflation was probably in the 1970s, when oil shocks were a common occurrence. While inflation isn’t as likely to hit double digits this time around, major central banks have for the first time in decades been faced with the prospect of missing their top price targets by a substantial margin. However, all the excitement may still turn out to have been for nothing as the global recovery is suddenly threatened by a new strain of Covid and optimism for a full economic reopening weakens..

Inflation, an unintended consequence?

One of the unintended consequences of lockdowns during the pandemic has been the severity of disruptions to production and supply chains, which have led to global shortages of key components, bottlenecks and pushed up raw materials prices. raw. Add to that the pent-up demand that has been unleashed with the reopening of economies, and it’s no wonder the prices of the goods and services most affected by the closures are skyrocketing.

Central banks, including the Federal Reserve, insist that these effects will be transient and that once the supply-side issues are resolved and the upturn in demand from the reopening wears off, l inflation will fall. But the big question for markets has always been how quickly these supply disruptions will subside, and with the added threat of wage inflation, investors are more concerned that these price increases will become “sticky.” as policy makers.

Another day, another fear of the virus

However, the inflation jitters seem to have faded of late as fears that the rapid spread of the Delta variant around the world could derail the full reopening of major economies are now seen as a bigger headwind. Investors have been flocking to safe havens regularly since June, but that trend has accelerated this week as the Delta outbreak shows no signs of abating.

After crossing Asia for the first time, this new, more dangerous strain is now spreading across Europe and infections are on the rise in the United States as well. Some traders are already predicting closures will become necessary again by September and the narrative that vaccines will end the pandemic is starting to crumble.

All of this sparked a reversal of the reflation trade that had boosted riskier assets while hammering sovereign bonds. But bonds are now rallying at their strongest since the peak of the viral crisis and Treasury yields are falling; the US 10-year rate fell to a 5-month low, falling below 1.20%.

Falling yields signal ominous clouds are gathering

Falling yields indicate investors are more wary of the outlook, lowering their earlier optimistic growth expectations as the latest escalation of the virus looks set to hamper recovery in a growing list of countries. Safe-haven currencies such as the Japanese yen and Swiss franc are also benefiting from a recovery thanks to risk-free trading. But the most impressive rally was that of the US dollar, which surged even as US nominal and real yields plunged.

The dollar index broke above the 93.0 level for the first time since early April and its 50 and 200 day moving averages look set for a bullish cross. If the bullish momentum continues, the index could soon surpass the March 31 peak at 93.437 and head towards the 123.6% Fibonacci extension of the March-May downtrend at 94.358.

When it comes to major dollar crosses, the $ 1.17 handle is at risk for the euro, the $ 1.3530 Fibonacci level for the pound, and the $ 0.7230 Fibonacci mark for the dollar. Australian, if the greenback continues to attract safe haven flows.

The worst could be over for the euro, not so much for the pound sterling and the aussie

Interestingly, after already being hit hard in June by divergent monetary policy stances between the Eurozone and America, the euro’s decline could be more moderate than that of the British Pound and the Aussie if the latest wave of virus is not receding quickly.

Indeed, investors had placed more hawkish bets for the Bank of England and Reserve Bank of Australia than for the European Central Bank, which was on a more accommodating path even before the Delta variant unleashed itself in the whole world. How the UK, in particular, is coping with the new spike in infections will be watched by the rest of the world.

A dangerous experience

Britain has lifted almost all restrictions despite skyrocketing daily virus cases to the highest since January, with the government banking on the country’s high vaccination rate to keep hospitalizations and deaths low. However, scientists accused the government of a “dangerous and unethical experiment” because letting the virus run rampant could create the perfect breeding ground for vaccine-resistant mutations.

But other than that, the uncontrollable spread of the Delta strain has already started to put pressure on hospitals, suggesting that even with vaccines, some degree of social distancing is needed. If in the coming weeks the UK government is forced to renege on its ‘Freedom Day’ promise, this could be a sell signal not only for sterling but for risky assets in general such as stocks. because that would be a warning to other countries too.

Will blockages force RBA to turn around?

In Australia, the situation is somewhat different as the nation had until recently been able to avoid prolonged lockdowns. But the highly contagious Delta variant emerged at a time when Australia was just beginning to roll out its vaccine. The longer it takes for the final locks to be lifted, the more likely it is that the RBA will maintain its quantitative easing program longer and perhaps even reverse the recently announced cut in bond purchases. It could be a disaster for the Aussie.

To hit or not, the dollar is safe

However, for the greenback, more negative headlines on viruses would likely strengthen it further, even if the Fed’s plan to start reduction talks in the summer is also rejected, as its safe-haven status should protect it. The biggest downside risk to the dollar right now is that infection rates in Europe and Asia are starting to slow, allaying fears about the growth outlook, and markets can breathe a sigh of relief. Then the focus would turn back to US inflation and how soon and at what level it will peak.

The return of stagflation?

But what if the Delta epidemic worsens in the coming months and the global economic rebound is significantly slowed down? Demand would be suppressed again and the inflation problem might go away, but only temporarily. The problem is, more blockages could make long-term supply chain problems even worse. This can then create the ideal conditions for stagflation as governments reach the limits of their fiscal strings and economic growth is unable to rebound so strongly.

Such a scenario would pose an even bigger headache for central banks than the current balancing act of supporting the recovery without fueling inflation. But for the Fed, it will likely continue the debate on reducing its asset purchases, and the uncertainty as a possible signaling of a decision at the Jackson Hole summit in late August looms could itself help. the volatility of the bond. markets.

Either way, the next few weeks will be crucial on three fronts: first, whether the Fed will go ahead and gradually decline and how much will it gradually do so, and second, whether inflationary pressures will show any signs. decrease, and finally, if the number of viruses will increase continues to climb at an alarming rate.

Source link

]]>
Live news, news, company news, company news, industry news, economic news, results analysis news, CEO interviews, interview with a fund manager, interview with an advisor, market news, bazaar talk, stock news, IPO news, commodities news, mutual funds news, insurance news, newswire http://thunderfromunder.com/live-news-news-company-news-company-news-industry-news-economic-news-results-analysis-news-ceo-interviews-interview-with-a-fund-manager-interview-with-an-advisor-market-news-bazaar-talk-st/ Tue, 20 Jul 2021 14:05:50 +0000 http://thunderfromunder.com/live-news-news-company-news-company-news-industry-news-economic-news-results-analysis-news-ceo-interviews-interview-with-a-fund-manager-interview-with-an-advisor-market-news-bazaar-talk-st/

The equity market opened negative and turned deep red during the first half of the session. He had some recovery from lower levels in the second half of the session, but failed to hold on and ended the day in the red for the 3rd day in a row. NIFTY / Sensex lost 120/355 points (-0.8% / 0.7%) to close at 15,632/52,199 respectively. The broader market significantly underperformed, with both Nifty Midcap 100 / Nifty Smallcap 100 falling -1.4% each. With the exception of consumer goods (+ 0.14%), all other sectors finished in the red. Massive sales in media (-2.6%), real estate (-2.5%), metals (-2.3%) and banking and financial services (-1.9%) led to the walked down. India VIX advanced 4.1% to close at 13.21, as the market declined.

Globally, markets continued to witness massive sell-offs, with the Dow Jones posting its worst day in nine months as COVID-19 deaths increased in the United States. The US 10-year bond fell to a 5-month low of 1.18%. European stocks rebounded from their worst day of the year on Tuesday, but Asian stocks were down as the fast-spreading Delta variant raised fears of further lockdowns that could disrupt the economic recovery.

Back home, domestic factors remained positive due to improving inflation data, good quarterly results and oil prices falling by around 10% over the past two days. However, continued sales of FIIs and weak global indices have had a negative impact on the domestic market.

Additionally, traders have been seen to book profits ahead of Wednesday’s holiday to avoid global volatility. Banking, auto, metals and real estate stocks were the biggest losers today, while cement and consumer goods stocks rebounded intelligently after ACC and Asian Paints reported impressive quarterly results. ACC’s 2QCY21 result positively surprised thanks to tight cost control. Moreover, coupled with a better pricing environment, this led to an EBITDA / t of Rs 1,279 – the highest since CY10 – despite higher energy costs.

Commenting on the market outlook, Siddhartha Khemka, Retail Research Manager, Motilal Oswal Financial Services said: “Technically, Nifty has formed a bearish candle on the daily scale and continued its lower highs – forming lower lows of the past two sessions. Key support now stands at around 15,500 zones while at On the upside, the index may face resistance around 15,800 levels. “

“The first quarter earnings season has so far been better than expected – leading to industry / equity specific action – which is also expected to continue in the near term. Additionally, it may provide investors with insight into the future. Magnitude of economic recovery through management commentary. Market has seen a selloff from recent life highs due to weakness in global indices. While declines are factored in, tracking is lacking higher levels, suggesting a certain fatigue setting in.

Overall, the equity markets have shown strong resilience even as they face headwinds related to the advent of a possible third wave of COVID and persistent inflation readings leading to a potential rate hike. This time around, restrictions were localized and less stringent compared to the CY20 lockdown, leading to positive macro data points on both the global and domestic front, giving investors confidence for the economic rebound. . Therefore, it would be a tough fight between the Bulls and Bears in the next few days and we must remain vigilant on possible movements in both directions, “he added.

Disclaimer: IRIS has used diligence and caution in compiling data for its website. The information was obtained by IRIS from sources it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of the information and is not responsible for any errors or omissions or the results obtained from the use of this information. IRIS specifies in particular that it assumes no financial responsibility of any kind towards any user as a result of the use of the information provided on its website.

Source link

]]>
Indian Markets Slow Track Global Sales http://thunderfromunder.com/indian-markets-slow-track-global-sales/ Tue, 20 Jul 2021 05:11:41 +0000 http://thunderfromunder.com/indian-markets-slow-track-global-sales/

Mumbai: Indian stock markets fell on Tuesday, following global stocks that fell on renewed concerns about the rapid spread of the delta variant. The twins HDFC and ICICI Bank were the main contributors to Sensex’s decline.

The benchmark Sensex was currently at 52,210.53, down 0.7%, while Nifty was down 0.7% to 15,643 points.

Asian stocks were down on Tuesday as growing fears that the spread of the delta variant of the coronavirus would hurt the global economic recovery sharply slipped riskier assets, including oil. Shares on Wall Street fell as much as 2% on Monday, with the Dow Jones recording its worst day in nine months as covid-19 deaths increased in the United States.

Back home, investors were also worried about the impact of rising inflation. Bank stocks came under pressure for the second session due to renewed asset quality fears / upward slippage following first quarter results from lenders. Metals and autos stocks also fell amid fears of the virus and inflationary concerns globally.

“The first quarter earnings season has been mixed so far and has led to some industry / equity specific actions that are expected to continue. Additionally, it may provide investors with a glimpse of the extent of the economic recovery. through management commentary. The market has consolidated near its highest levels of living over the past two weeks. While declines are factored in, tracking is missing at higher levels, suggesting a some fatigue, ”said Siddhartha Khemka, head of retail research, Motilal Oswal Financial.

“Overall, the stock markets have shown strong resilience even as they face headwinds related to the advent of a possible third wave of COVID and persistent inflation readings causing a potential rate hike, ”Khemka added.

To subscribe to Mint newsletters

* Enter a valid email

* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint. Download our app now !!


Source link

]]>
Live news, news, company news, company news, industry news, business news, results analysis news, CEO interviews, fund manager interview, interview with an advisor, market news, bazaar talk, hot stock news, IPO news, commodities news, mutual fund news, insurance news, newswire http://thunderfromunder.com/live-news-news-company-news-company-news-industry-news-business-news-results-analysis-news-ceo-interviews-fund-manager-interview-interview-with-an-advisor-market-news-bazaar-talk-hot-stock/ Mon, 19 Jul 2021 13:46:41 +0000 http://thunderfromunder.com/live-news-news-company-news-company-news-industry-news-business-news-results-analysis-news-ceo-interviews-fund-manager-interview-interview-with-an-advisor-market-news-bazaar-talk-hot-stock/

Equity markets opened the gap due to moderate global indices. Although he tried to recover, he fell again in the second half of the day. Both NIFTY / Sensex lost 171/587 points (-1.1% each) to close at 15,752/52,553. The broad market was mixed with Nifty Midcap 100 down 0.8% while Nifty Smallcap 100 remained stable at slightly positive (+ 0.03%). With the exception of Real Estate (+ 0.4%) and Pharma (+ 0.2%), all other sectors finished in the red. The Nifty Private Bank index (-2.0%) was the worst performer, dragged down by the heavyweight of the HDFC Bank index which fell -3.3% after posting weak results. Nifty Bank (-1.9%), metals (-1.4%), automobiles (-1.1%) were among the other big losers. Media, IT, consumer products lost between 0.2% and 0.5%. India VIX edged up 8.4% to close at 12.68.

Globally, markets have remained weak as investors have become pessimistic about the increase in the Delta variant of Covid-19 cases, fears of a possible foreclosure and the impact of the rising price. inflation on economic recovery.

Back home, following the global trend, domestic stocks also came under selling pressure and ended down more than 1%. Sales were seen in banking and financial services stocks after HDFC Bank’s net profit fell short of expectations as bad debt provisions increased and asset quality deteriorated.

Real estate stocks were the center of attention today following the announcement that the country’s leading developers have raised residential prices by 8-10% due to rising prices for inputs, such as cement. , steel, etc.

The primary market was in full swing as 2 new stocks listed at a significant premium after getting a blockbuster subscription. Clean Science shares listed with a 98% premium at Rs 1,784 over its issue price of Rs 900 while GR Infra shares debuted at Rs 1,700, a 103% premium over its IPO price of Rs 837.

Commenting on the market outlook, Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services expressed his opinion, “Technically, Nifty has formed a Doji candle on a daily scale with long shadows on either side and canceled his higher highs – the formation of higher lows from the last five sessions. Now he has to cross and hold on to the above 15,750 areas to witness a rise to 16,000 levels while on the downside, support exists at 15,700/15,600 levels.

The Q1 earnings season so far has been mixed and has led to some industry / equity specific actions that are expected to continue. It can also provide investors with insight into the extent of the economic recovery through management commentary. The market has consolidated near its highest living standards over the past two weeks. While drops are accepted, tracking is lacking at higher levels, suggesting some fatigue.

Overall, equity markets have shown strong resilience even as they face headwinds related to the advent of a possible third wave of COVID and persistent inflation readings leading to a potential rate hike. This time around, restrictions were localized and less stringent compared to the CY20 lockdown, leading to positive macro data points on both the global and domestic front, giving investors confidence for the economic rebound. . Therefore, it would be a tough fight between the Bulls and Bears in the next few days and we have to be vigilant about possible moves back and forth. “

Disclaimer: IRIS has used diligence and caution in compiling data for its website. The information was obtained by IRIS from sources it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of the information and is not responsible for any errors or omissions or the results obtained from the use of this information. IRIS specifies in particular that it assumes no financial responsibility of any kind towards any user as a result of the use of the information provided on its website.


Source link

]]>
Extra money for retired teachers in ’13th check’ at center of Republican-Democrat shouting game | Texas http://thunderfromunder.com/extra-money-for-retired-teachers-in-13th-check-at-center-of-republican-democrat-shouting-game-texas/ Sat, 17 Jul 2021 18:56:00 +0000 http://thunderfromunder.com/extra-money-for-retired-teachers-in-13th-check-at-center-of-republican-democrat-shouting-game-texas/

Republican officials sounded the alarm last week that retired teachers in Texas are unlikely to receive an additional payment of up to $ 2,400 from the state’s teachers’ retirement fund. Democrats ending the special legislative session.

GOP lawmakers held at least three press conferences singling out Democrats who fled to Washington, DC on Monday in an attempt to block GOP voting bills.

“There really is no excuse not to be here for the people who have been here for them all of their lives and for the lives of their children and for their constituents,” said Senator Angela Paxton, R-McKinney, at a press conference on Friday. . “They deserve better than to have lawmakers skipping class because they don’t like the mission.”

But Democrats and teachers’ groups say Republicans were to blame for the bill’s failure in the regular legislative session, and are now using retired teachers as a political pawn in the battle for breaking the quorum of Democrats.

On Tuesday, the Senate passed Senate Bill 7, which would provide retired teachers, counselors and school staff with a one-time payment, or “13th check,” of up to $ 2,400 through the system. Texas Teachers Retreat. It would apply to thousands of former educators who quit work before the start of this year and reach the pockets of retirees no later than January 2022.

These retirees say it’s less important to lay the blame than to send those checks out the door.

“I want to see this ’13th check’ in the hands of all retirees who deserve it,” said Rita Runnels, a retired educator. “I want to see them come together and do this.”

The Texas American Federation of Teachers said on Twitter that the “sudden” interest in passing a 13th check this special session “rings hollow.”

“Blaming House Democrats for ‘killing’ this bill by breaking the quorum to preserve Texans voting rights does not erase the longstanding inaction of heads of state on the issue,” said the organization in a tweet.

Rep. Vikki Goodwin, D-Austin, supported a 13th check bill for retired educators during the regular session, House Bill 3507. The bill, which had more than 100 bipartisan members signed on as co -authors, came out of a House committee but was never scheduled for a vote in plenary.

“It would have been way past if he had hit the ground – so this whole idea that we’re preventing teachers from getting a 13th paycheck is ludicrous,” Goodwin said. “We had the opportunity during the session to make that happen.”

The Calendars Committee, which schedules bills for votes in the House, is chaired by a Republican.

Renae Eze, spokesperson for Gov. Greg Abbott, said in a statement Friday that the governor would work to support retired educators.

“Our retired teachers deserve better than the Democrats in Texas stepping down and handing over their posts to those who elected them,” Eze said.

Goodwin said it was frustrating that Republicans militarized educators.

“I have enormous respect for our teachers and retired teachers,” said Goodwin. “I would never use them as a pawn in a game to make another group of people look bad.”

Republican lawmakers said Thursday they did not pass Goodwin’s bill in the regular session because the state did not have the funds.

Enrique Marquez, chief of staff to House Speaker Dade Phelan, said in a statement that the economy has since improved in the wake of the pandemic and recession, citing a revised estimate of biennial income from the comptroller’s office. last week.

“The state has several billion dollars in general revenue available that was not available for use in the regular session,” Marquez said. “We want to dedicate some of this to a 13th check for retired teachers when House Democrats finally get back to work.”

The comptroller’s office also updated its revenue estimates in the last month of the May regular session to say that the state “assumes continued economic growth in the next biennium,” but noted that this forecast does not take into account credits opened in session.

“Texas remains well positioned to recover from the COVID epidemic and return to its standard of economic growth above the national rate – if it has not already done so,” Texas Comptroller Glenn Hegar said in a press release .

An additional bill introduced in the special session, House Bill 120, would give retired teachers a cost-of-living adjustment for their pension checks.

Tim Lee, executive director of the Texas Retired Teachers Association, said that while the 13th check is a short-term solution to helping retired educators, the passage of a bill to increase the adjustment of the cost of living – which accounts for inflation over time with pension checks – is a more difficult and longer-term goal.

“There is obviously time on the clock and we hope they will fix this problem, but there is some doubt,” said Lee. “Doubt really creeps into the minds of our retirees. “


Source link

]]>
Delta set to dominate after Powell beats dollar http://thunderfromunder.com/delta-set-to-dominate-after-powell-beats-dollar/ Fri, 16 Jul 2021 15:14:31 +0000 http://thunderfromunder.com/delta-set-to-dominate-after-powell-beats-dollar/

  • GBP / USD swung in response to high inflation and dismissive responses from central banks.
  • Covid headlines, UK reopening and US infrastructure talks stand out.
  • The daily chart for mid-July paints a mixed picture.
  • The FX poll indicates short-term declines before a rally thereafter.

Is inflation transient or not? There is no doubt that prices are rising quickly, but no less important is the interpretation of the data by the almighty Fed. Growing cases of Delta COVID-19 on both sides of the pond are expected to gain prominence, as are talks over US infrastructure.

This week in GBP / USD: Rising inflation, no alarm bells

US inflation is undoubtedly on the rise – the consumer price index hit 5.4% year-on-year in June and the core CPI hit 4.5%, two shocking estimates. However, the main drivers remained tied to the reopening – prices for used vehicles, car rentals, airline tickets and clothing. Spending a night in a hotel is also expensive.

Will faster price increases be transitory or will they persist, turning into higher inflation expectations? Investors opted for the latter first, assessing the current pressures and buying the dollar. However, the ultimate judge was Jerome Powell, Chairman of the Federal Reserve.

The world’s most powerful central banker has said that while inflation is expected to stay high for several months, it is transient and should ease. In addition, he said the economy was still “a long way off” from “making further substantial progress” – the Fed’s vague term for determining when to cut its bond buying program.

Seeing that the Fed continues to create $ 120 billion per month, the greenback has lost ground.

As Powell spoke in a room on Capitol Hill, Democrats used another corner of the building to showcase a $ 3.5 trillion infrastructure package. At the time of writing, it is still unclear whether Senator Joe Manchin (D-WV) – the pivotal Conservative Democrat – is backing him. The markets seem to be reserving their judgment for now.

In the UK, Prime Minister Boris Johnson has insisted the July 19 reopening will proceed, despite the rapid spread of the Delta variant. Fears of an increase in deaths and hospitalizations also weighed on the pound.

COVID-19 cases in the US and UK:

Source: FT

The virus is spreading in the United States, which has seen the number of infections double – albeit from a low base and concentrated in places with low vaccination rates. So far, this worrying development has not yet had an impact on the markets.

Getting back to the data, UK inflation is also rearing its ugly head – 2.5% yoy in June, higher than expected. In addition, wage growth accelerated to 7.3% per year in May, a potential precursor to increased spending. Britain’s unemployment rate climbed to 4.8%.

Yet, like in the United States, what matters is what central banks say they will face with rising prices – not anyone else’s interpretation. Bank of England Governor Andrew Bailey has said he will not be forced to hike rates in response to transient inflation, pushing the pound down.

On the other hand, his BOE colleague Michael Saunders presented a hawkish point of view – calling for an end to bond buying and a possible increase in borrowing costs. Saunders’ comments had only a short-lived bullish effect on the pound.

Events in UK: reopening with fear and retail sales in sight

Freedom Day has arrived – nearly all covid regulations will be thrown to the bonfire on July 19, raising fears the current spread of the delta will worsen. Criticism of government decisions – such as confusion over wearing face masks on public transport – could increase the chances of the restrictions returning.

Daily coronavirus infections, hospital admissions and deaths could have a bigger impact on the pound than ever before. If the health services come under pressure, the Prime Minister could turn around again. On the flip side, if vaccinations are at enough levels to reverse the trend, the pound could shine.

More than half of the UK population is fully vaccinated and almost 70% have received at least one dose. However, reaching the last adults turns out to be a more difficult task, as shown by the drop in daily hits. Investors would rather see the chart turn higher.

Source: The Guardian

The retail sales statistics for June are interesting, and they could benefit from a ‘football boost’ – increased consumption due to Euro 2021 matches. Annual increases are expected to remain high due to a lower spending at this time last year.

Markit’s preliminary purchasing managers’ indices for July are likely to show a drop in business confidence after reaching high levels in June. Any score above 50 represents expansion, and the 62.4 level reported for the service sector is particularly high. Holding above 60 should support the pound sterling.

Here is the list of UK events on the FXStreet calendar:

Events in the United States: Delta in and infrastructure in sight

Will the Delta strain derail the American recovery? With nearly half of the population fully protected and around 56% having received at least one injection, many vulnerable areas of the country could be in difficulty. The increase in infections has already increased hospitalizations.

More fire must arm to keep the recovery swift, and the aggregate numbers above mask a sharp divide between states. In Vermont, 75% of the population has received an injection, while the rate is only 38% – about half – in Mississippi.

Without an increase in this chart, there could be more damage that would support the safe haven dollar.

Progress of the vaccine in the United States:

Source: NYT

Senate Majority Leader Chuck Schumer has circled July 21 as the date he wants the infrastructure deal “to move forward.” The massive $ 3.5 trillion package is still awaiting the blessing of Joe Manchin, the most conservative member of the ruling party. The greenback could go up if the legislation advances.

However, there is a good chance that discussions about how to fund this spending will cause delays – and changes – to the package. Markets have ignored the news from Washington, but may tune in if talks advance.

The economic calendar is lighter than in previous weeks, but there are several noteworthy releases. Housing figures should continue to show a robust construction market in June. Markit’s preliminary PMIs for July carry mixed expectations – an increase in activity in the services sector but a decline in the manufacturing sector.

Here are the main US events coming up this week:

GBP / USD technical analysis

The Pound / Dollar is trading within a broad, well-defined range – capped by the round 1.40 level and supported by the 1.3670 double bottom line. Where will he go next? Momentum turns tentatively positive on the daily chart, but the Cable is still below the 50 and 100 Day Simple Moving Averages, and the 200 Day SMA is creeping in there. Overall, the picture is mixed.

Support is waiting at 1.38 which cushioned the pair in mid-July. It is followed by 1.3730, the monthly low. Beyond 1.3670 the next level to watch is 1.3565.

Resistance is at 1.3910 which is the July high. Above 1.40, the next significant highs are 1.4140 and 1.4250.

GBP / USD sentiment

The Delta variant may become more influential on both sides of the Atlantic – and that’s a losing situation for the GBP / USD.

the FXStreet Forecast Survey shows experts expect more pain in the near term – a close below 1.38 in the coming week. However, the tables should turn in favor of the medium to long term bulls, pushing the GBP / USD back towards 1.40 again. The average targets have been revised downwards compared to the previous week.

Related readings


Source link

]]>
Biggest U.S. banks crush earnings estimates as economy picks up http://thunderfromunder.com/biggest-u-s-banks-crush-earnings-estimates-as-economy-picks-up/ Wed, 14 Jul 2021 18:39:00 +0000 http://thunderfromunder.com/biggest-u-s-banks-crush-earnings-estimates-as-economy-picks-up/

WASHINGTON, July 14 (Reuters) – America’s four largest consumer banks this week released successful second quarter results after pandemic loan losses did not materialize and the US economy began to recover life.

Wells Fargo & Co (WFC.N), Bank of America Corp (BAC.N), Citigroup Inc (CN) and JPMorgan Chase & Co (JPM.N) posted combined profit of $ 33 billion, supported by unlock $ 9 billion in reserves they set aside last year to absorb feared pandemic losses.

That topped analysts’ estimates by around $ 24 billion combined, down from $ 6 billion in the quarter last year.

Consumer spending has increased, sometimes beyond pre-pandemic levels, as credit quality has improved and savings and investments have increased, banks said.

Thanks to the government’s extraordinary stimulus measures and loan repayment holidays, the feared pandemic losses did not materialize. A nationwide rollout of immunization has also allowed Americans to get back to work and start spending again.

Sizzling capital markets activity has also helped America’s biggest banks, with Goldman Sachs Group Inc (GS.N) reporting profit of $ 5.35 billion, more than double its adjusted profit a year ago. year. Read more

“The pace of the global recovery is exceeding previous expectations and with it, consumer and business confidence is rising,” said Jane Fraser, CEO of Citigroup.

This was reflected in a recovery in consumer lending.

For example, JPMorgan said combined spending on its debit and credit cards increased 22% from the same quarter in 2019, when spending patterns were more normal.

Spending on Citi-branded credit cards in the United States jumped 40% from the previous year, but with so many customers paying off their balances, its card loans fell 4%. Read more

Citigroup CFO Mark Mason said the bank expects more customers to revert to their pre-pandemic model of carrying revolving balances as government stimulus packages end later this year.

Wells Fargo reported a 14% gain in credit card revenue from Q2 2020, due to higher volume at point-of-sale. Revenue increased slightly from the first quarter, the bank said. Read more

“What we are seeing is that people are starting to spend and act more in a way that looks more like it was before the pandemic started and certainly on the consumer side the spending has dramatically increased. increased, even if you compare them to 2018, “Wells Fargo CFO Mike Santomassimo told reporters.

While loan growth is still subdued, which is generally bad for bank profits, there are signs that demand is declining.

Excluding loans related to the U.S. government’s pandemic assistance program, loan balances at Bank of America, for example, were up $ 5.1 billion from the first quarter. Read more

“Deposit growth is strong and loan levels have started to rise,” Bank of America CEO Brian Moynihan said in a statement.

JPMorgan, the country’s largest lender, reported profits of $ 11.9 billion on Tuesday, up from $ 4.7 billion last year.

Citigroup’s second-quarter profit reached $ 6.19 billion, from $ 1.06 billion last year, while Bank of America profit jumped to $ 8.96 billion from $ 3.28 billion of dollars. Read more

Wells Fargo posted a profit of $ 6 billion compared to a loss of $ 3.85 billion last year, which was largely related to special items.

While the results point to good news for consumers and businesses, low interest rates, weak demand for loans and a slowdown in trade are likely to weigh on results going forward, analysts said.

The US Federal Reserve is staying the course, with a 2% inflation target and no plans to tighten monetary policy, for example by raising interest rates, Fed Chairman Jerome Powell said in comments. remarks prepared for an appearance in Congress Wednesday. Read more

This suggests that banks will have to deal with low rates for an extended period.

Reporting by Michelle Price; additional reporting by Noor Zainab Hussain, David Henry and Matt Scuffham; Editing by Lauren Tara LaCapra and Nick Zieminski

Our Standards: The Thomson Reuters Trust Principles.


Source link

]]>
Texas Top Golf Shocker, Men’s Lightning Zapped Golf Ball http://thunderfromunder.com/texas-top-golf-shocker-mens-lightning-zapped-golf-ball/ Mon, 12 Jul 2021 23:12:21 +0000 http://thunderfromunder.com/texas-top-golf-shocker-mens-lightning-zapped-golf-ball/

I have now watched for at least the 20th time the video of a golf ball of a young man being zapped in flight by lightning. This would have happened a little over a week ago at a Top Golf located in San Antonio. I say so for several reasons which I will come back to later.

First of all, the video is amazing. A group of children decide to challenge Mother Nature as a massive downpour arrives. A young man with a metal screwdriver firmly in his hand throws a golf ball at 88 mph into the side rain spray. So … BAM! Lightning strikes the ball and makes it glow, reminiscent of something you would see happen on Earth in a Marvel movie.

The video is compelling and I have nothing to disprove its authenticity. I’m not an expert in video editing, so I don’t know how much editing and technology it would take to create a video like this. I imagine someone who can pretend should get a job as one of the Disney World Imagineers. It’s high level stuff. This is one of the reasons I am leaning towards making this video and this event real.

There are a few other things about this event, however, that just give me a little break. Such as:

Isn’t there some sort of standard operating procedure in place at Top Golf that would result in a mandatory shutdown when thunderstorms accompanied by lightning are detected some distance from the business? Allowing customers to get into a storm is simply asking for legal action.

Many of the stories published about this incident quickly note that the ball was traveling at 88 mph. Yes, I know Top Golf has some technology in place that tracks ball speed, and 88mph is certainly a credible exit speed for a golf ball hit by an amateur. But, as many have noted, 88 mph is linked to something else that produced an outbreak of electrical sparks and fire. Everyone remembers the DeLorean time machine from Back to the Future. Is that golf ball now in a fairway somewhere near a Hill Valley golf course in 1955?

Finally, that’s the physics of it. A number of commentators on YouTube and social media argue that the lightning should have gone through the bullet and headed for another grounded source. I know enough about electricity to turn off the breaker when working with it … and that’s about it. So if anyone reading this has a background in physics, and more specifically in electrical conductivity, don’t hesitate to give your opinion.

Even with these questions, I still have to think of this as an authentic video and event. Take a look and tell me what you think.

LOOK: What are the chances that these 50 totally random events will happen to you?

Stacker took the guesswork out of 50 random events to determine the likelihood of them actually happening. They drew their information from government statistics, scientific articles and other primary documents. Read on to find out why expectant parents shouldn’t rely on due dates – and why you should be more worried about dying on your birthday than living to 100.

WATCH: The costliest weather and climate disasters of decades

Stacker ranked the costliest climate disasters by the billions since 1980 by the total cost of all damage, adjusted for inflation, based on 2021 data from the National Oceanic and Atmospheric Administration (NOAA). The list begins with Hurricane Sally, which caused $ 7.3 billion in damage in 2020, and ends with a devastating hurricane in 2005 that caused $ 170 billion in damage and killed at least 1,833 people. Read on to learn about the 50 costliest climate disasters of the past decades in the United States.

Source link

]]>
Year in Review: Australia – The Bull http://thunderfromunder.com/year-in-review-australia-the-bull/ Sun, 11 Jul 2021 04:41:15 +0000 http://thunderfromunder.com/year-in-review-australia-the-bull/

Most recently, in June, I celebrated the 18the anniversary of the Fidelity Australian Equities Fund. I have always managed the Evolution rather than Revolution Fund, and it has served us extremely well, especially during crises like the COVID-19 pandemic.

While the impact of the coronavirus on people’s lives has been much more negative than originally thought, the impact on the economy and the markets has been much more limited than expected.

Australia has been relatively resilient over the past year and I believe it will remain a prime geography for investing, working and studying. We have seen the acceleration of existing trends such as e-commerce, digital food and drink delivery, cashless transactions, working from home, and a preference for sportswear over formal wear. These trends have widened the universe of investment opportunities as more innovations and business models have entered the market.

The discrepancy we are seeing between the severity of the pandemic and the impact on the economy is due to stimulus measures from the government and the central bank. Both responses have been extraordinary and have created strong favorable winds for the economy and asset prices. However, a full recovery will depend on the deployment of vaccination and the reopening of national borders.

As the economy grows and demand strengthens, inflation rises. However, I believe that the recovery will have to be sustained for a few years, for demand to reach pre-pandemic levels and therefore it will take some time for inflation to reach a significant level.

We have seen central banks trying to keep interest rates as low as possible for as long as possible to ensure strong growth. High growth and low interest rates are also expected to contribute to the natural repayment of public debt, which increased significantly during the pandemic.

Our own Reserve Bank of Australia (RBA) has also emphasized that it doesn’t think it will have to raise interest rates significantly until 2024, when it believes we will start to see growth. real wages. It’s fair to say that the market doesn’t believe them and built in higher interest rates earlier.

My opinion is that interest rates will rise, but due to the current temporary inflation we will see volatility rise and interest rates take a shark-tooth path. I am much more in the longer term camp that official interest rates will increase over an 18 month to two year period.

The recovery is off to a good start, and I think five years from now we will see it as having been a great time to invest in the equity market for the long term. That said, investors shouldn’t expect this to be without volatility along the way.


Source link

]]>