Connect with us

International

Four Drivers in the Week Ahead

After the US and UK holidays on Monday, there are four highlights in the week ahead. First, the Reserve Bank of Australia’s meeting will receive more attention after the Reserve Bank of New Zealand signaled the likelihood of a rate hike in the second…

Published

3 years ago

on

After the US and UK holidays on Monday, there are four highlights in the week ahead. First, the Reserve Bank of Australia's meeting will receive more attention after the Reserve Bank of New Zealand signaled the likelihood of a rate hike in the second half of next year. Second, the G7 finance ministers may agree to endorse a proposal for a minimum corporate tax rate of 15% and an additional tax on the largest 100 companies (so that areas in which they sell can collect taxes).  

Central banks say that their policy path is data-dependent, but this is coded language.  Officials at the Fed and ECB say price pressures are transitory, which means that it will look past near-term increases.  Yet, the ECB's Panetta seemed to link the increased bond purchases to sustained inflation pressures.  That means the June 1 preliminary estimate of the eurozone's May CPI will likely garner more attention than otherwise would have been the case.  When Fed officials like  Vice Chair Clarida talk about the importance of economic data, they probably have employment on their minds, not inflation.  After the big miss with the April jobs report, the May reading on June 4 will be riveting.  

RBA Meeting:   The Australian economy is around six times larger than the New Zealand economy.  Its terms of trade are dramatically different.  The Reserve Bank of New Zealand's reintroduction of its cash rate path outlook, with the first rate hike penciled in for H2 22, has no real material bearing on the Reserve Bank of Australia's meeting on June  1.  It is similar, though different than the ECB's Lagarde and the Fed's Powell batting away questions about if the Bank of Canada assessment that its economic slack will be absorbed in the second half of next year and that it would reduce its bond-buying says anything about the conduct of their respective monetary policies. 

Even those who think that the RBNZ is a sort of tell are not expecting much from this week's RBA meeting.  The July 6 meeting is more important.  First, the term funding facility is set to end on June 30.  Second, officials have already indicated that it will decide in July whether to target the November 2024 yield under the RBA's yield-curve control strategy, rolling out from the current April 2024 issue. The central bank will also decide then whether to have another round of asset purchases when the current A$200 bln operation is completed at the end of September.   

Like the Federal Reserve, the Reserve Bank of Australia has emphasized labor market developments in its reaction function.  Employment data has not been clean for a couple of months.  The JobSeeker income support program ended in March, and the holidays (Easter and school holiday) may have exaggerated the job loss in April (-30.6k, well below the median forecast in the Bloomberg survey for a gain of 20k).  The May report (due June 17 in Canberra) is expected to bounce back smartly.  Despite the disappointment, judging from survey data, anticipating lower unemployment in the coming quarters than previously.  

G7 Finance Ministers:  It has been a while since the G7 finance ministers meeting was truly a highlight. It may have acted in concert as the pandemic first struck, but it was not coordinated, and it was the Fed's swap line with several foreign central banks that provided that key international support.  With the combination of the increased importance of the G20 (partly reflecting the rise of China and India), the attitude of the Trump administration, and the salience of domestic challenges, the G7 has morphed into a caucus within the larger group.  

The coordination function is key now.  The issue is corporate tax reform.  It has been debated for several years and was stymied, in good measure, due to US intransigence.  However, this has changed, and, as the old saw has it, the convert sings loudest in the choir.  The Biden administration has jumped to the front of the queue it had been trailing.  Although the OECD had been talking about a 12.5% minimum corporate tax rate for a few years, Biden initially suggested 20%.  Facing strong pushback, the US Treasury compromised and proposed a 15% floor.   If it does not get the endorsement of the G7 finance ministers or if it is diluted to be less definitive, hopes for the G7 heads of state summit in mid-June will diminish.  It would also be seen as a setback for Biden's domestic agenda, which seeks to lift the corporate tax schedule to 28% from 21% (though some estimates put the effective tax rate at closer to 16% in 2019). 

Ireland is not part of the G7 or G20, but it still is a significant stakeholder.  Its 12.5% corporate tax rate attracts a large number of technology and pharmaceutical companies to book profits. The UK has also pushed back, less forcefully, perhaps, and some press accounts suggest its position may be wavering.  The issue is the digital tax that several countries are at different stages of implementing  Because it appears to single out US companies, Washington has demurred.  And more; the US has threatened to retaliate.  The compromise is to broaden the base to include other companies that sell many products online internationally.  The goal is to recognize countries' right to tax where the sales are made rather than where the company books the profit.  Fitting into the populist moment, the Biden administration has recast it to be a tax on the largest 100 companies.   Many countries seem more enthusiastic about this than a minimum corporate tax rate.  

EMU May CPI:  The ECB has one mandate:  price stability, which it presently defines as close to but below 2%.  Many expect this could be tweaked to simply 2% later this year, but the significance may be difficult to articulate.  ECB President Lagarde has sketched out many reasons why officials are inclined to look through the near-term gains in measured inflation.  They largely have to do with base effect, changing the weights of the basket of goods and services used, alterations to the seasonal sales, and tax adjustments like the end of the temporary reduction in the German VAT. 

Europe seems to be a few months behind the US in the vaccine rollout, fiscal stimulus, and price pressures.  The base effect in the US, for example, will peak with the May report.  Last June and July, headline CPI rose by 0.5%, making year-over-year comparison not as challenging.  That may lower the anxiety over inflation.  On the other hand, measured eurozone inflation is likely to surge in July and August when headline CPI fell by 0.4% in both months in 2020.  

A 0.2% rise in May's EMU CPI would lift the year-over-year rate to 1.9%, the highest since the inflation scare in H2 2018.  Around half of this emanates from food and energy.  Excluding them, May's core rate is expected to tick up to 0.9% from 0.7%.  Some try reductio absurdum to argue that if one excludes the items that show rising prices, inflation disappears.  The truth of the matter is that as a heuristic device it is useful because 1) over time, the headline rate appears to converge to the core rate, not the other way around, and 2) food and energy prices are (often?) subject with supply shocks and not a reflection of monetary policy.  EMU's 12-month moving average core rate was stable at 1.0%-1.1% from September 2017 and August 2020.  

Last week, a notable development was the attempt to link the stronger bond-buying under PEPP to inflation by the ECB's Panetta.  It is not clear that this will ultimately prove to be a decisive argument.  The increased buying announced at the March meeting was not linked to inflation or inflation expectations at the time.  Recall that yields appeared to have been dragged higher by the sharp rise in US rates as the vaccine rollout accelerated and additional fiscal stimulus (after the $900 bln package at the end of 2020) was provided.  Europe yields have risen, and premia over Germany have risen.  Most of it took place in April.  

US May Employment Report:  In the mid-to-late 1980s, the US trade report seemed to be the most anticipated high-frequency data point, replacing money supply.  However, since probably the early 1990s, the national employment report takes the honor.  The disappointment with the 266k increase in April nonfarm payrolls shocked policymakers and investors.  Economists who had forecasted a million jobs, and there was a projection for two million, have been chastened.    In the survey for the May establishment survey, only three of the 56 respondents look for a 900k or more increase.   At the same time, there may be a tendency to overcorrect, and some the low estimate is 335k.  The median and average converge around 650k.  

Millions of jobs begin and end every month.  The nonfarm payroll report is the net change.  It is by all accounts among the most difficult numbers to predict.  There are few useful and timely inputs. Weekly initial jobless claims have marginal.  Between survey weeks, the four-week moving average of weekly initial state jobless claims fell by around 150k.   It had fallen by 100k previously.   The preliminary PMI was strong, led by labor-intensive service business activity in the hard-hit leisure and travel sectors.  

The market reacted dramatically to last month's disappointment.  The 10-year yield plunged from around 1.58% to almost 1.46%, a two-month low, but within a few hours had fully recovered.  The other observation is that yields have tended to rise into the month-end.  This was the case in Q1.  However, the 10-year yield was trending higher, and the rise into the end of the month meant little, but it is happening in Q2 even as yields drifted lower.  Of course,  initial conditions matter, and the market reaction is often driven by short-term market positioning. Still, perhaps the takeaway from last month's experience is that one month's number will not change the Fed's stance.  Moreover, in the few weeks since that underwhelming jobs report, which was followed by disappointing retail sales, housing starts, and durable goods orders, there has been an increase in the number of Fed officials referring a discussion of tapering in the coming months.   Just like the knee-jerk rally in Treasury prices was faded, so too a sell-off on a stronger report will likely be bought.    



Disclaimer



Read More

Related Topics:
Continue Reading

International

Home buyers must now navigate higher mortgage rates and prices

Rates under 4% came and went during the Covid pandemic, but home prices soared. Here’s what buyers and sellers face as the housing season ramps up.

Published

21 mins ago

on

March 17, 2024

By

Springtime is spreading across the country. You can see it as daffodil, camellia, tulip and other blossoms start to emerge. 

You can also see it in the increasing number of for sale signs popping up in front of homes, along with the painting, gardening and general sprucing up as buyers get ready to sell. 

Which leads to two questions: 

  • How is the real estate market this spring? 
  • Where are mortgage rates? 

What buyers and sellers face

The housing market is bedeviled with supply shortages, high prices and slow sales.

Mortgage rates are still high and may limit what a buyer can offer and a seller can expect.  

Related: Analyst warns that a TikTok ban could lead to major trouble for Apple, Big Tech

And there's a factor not expected that may affect the sales process. Fixed commission rates on home sales are going away in July.

Reports this week and in a week will make the situation clearer for buyers and sellers. 

The reports are:

  • Housing starts from the U.S. Commerce Department due Tuesday. The consensus estimate is for a seasonally adjusted rate of about 1.4 million homes. These would include apartments, both rentals and condominiums. 
  • Existing home sales, due Thursday from the National Association of Realtors. The consensus estimate is for a seasonally adjusted sales rate of about 4 million homes. In 2023, some 4.1 million homes were sold, the worst sales rate since 1995. 
  • New-home sales and prices, due Monday from the Commerce Department. Analysts are expecting a sales rate of 661,000 homes (including condos), up 1.5% from a year ago.

Here is what buyers and sellers need to know about the situation. 

Mortgage rates will stay above 5% 

That's what most analysts believe. Right now, the rate on a 30-year mortgage is between 6.7% and 7%. 

Rates peaked at 8% in October after the Federal Reserve signaled it was done raising interest rates.

The Freddie Mac Primary Mortgage Market Survey of March 14 was at 6.74%. 

Freddie Mac buys mortgages from lenders and sells securities to investors. The effect is to replenish lenders' cash levels to make more loans. 

A hotter-than-expected Producer Price Index released that day has pushed quotes to 7% or higher, according to data from Mortgage News Daily, which tracks mortgage markets.

Home buyers must navigate higher mortgage rates and prices this spring.

TheStreet

On a median-priced home (price: $380,000) and a 20% down payment, that means a principal and interest rate payment of $2,022. The payment  does not include taxes and insurance.

Last fall when the 30-year rate hit 8%, the payment would have been $2,230. 

In 2021, the average rate was 2.96%, which translated into a payment of $1,275. 

Short of a depression, that's a rate that won't happen in most of our lifetimes. 

Most economists believe current rates will fall to around 6.3% by the end of the year, maybe lower, depending on how many times the Federal Reserve cuts rates this year. 

If 6%, the payment on our median-priced home is $1,823.

But under 5%, absent a nasty recession, fuhgettaboutit.

Supply will be tight, keeping prices up

Two factors are affecting the supply of homes for sale in just about every market.

First: Homeowners who had been able to land a mortgage at 2.96% are very reluctant to sell because they would then have to find a home they could afford with, probably, a higher-cost mortgage.

More economic news:

Second, the combination of high prices and high mortgage rates are freezing out thousands of potential buyers, especially those looking for homes in lower price ranges.

Indeed, The Wall Street Journal noted that online brokerage Redfin said only about 20% of homes for sale in February were affordable for the typical household.

And here mortgage rates can play one last nasty trick. If rates fall, that means a buyer can afford to pay more. Sellers and their real-estate agents know this too, and may ask for a higher price. 

Covid's last laugh: An inflation surge

Mortgage rates jumped to 8% or higher because since 2022 the Federal Reserve has been fighting to knock inflation down to 2% a year. Raising interest rates was the ammunition to battle rising prices.

In June 2022, the consumer price index was 9.1% higher than a year earlier. 

The causes of the worst inflation since the 1970s were: 

  • Covid-19 pandemic, which caused the global economy to shut down in 2020. When Covid ebbed and people got back to living their lives, getting global supply chains back to normal operation proved difficult. 
  • Oil prices jumped to record levels because of the recovery from the pandemic recovery and Russia's invasion of Ukraine.

What the changes in commissions means

The long-standing practice of paying real-estate agents will be retired this summer, after the National Association of Realtors settled a long and bitter legal fight.

No longer will the seller necessarily pay 6% of the sale price to split between buyer and seller agents.

Both sellers and buyers will have to negotiate separately the services agents have charged for 100 years or more. These include pre-screening properties, writing sales contracts, and the like. The change will continue a trend of adding costs and complications to the process of buying or selling a home.

Already, interest rates are a complication. In addition, homeowners insurance has become very pricey, especially in communities vulnerable to hurricanes, tornadoes, and forest fires. Florida homeowners have seen premiums jump more than 102% in the last three years. A policy now costs three times more than the national average.

Related: Veteran fund manager picks favorite stocks for 2024

 

Read More

Continue Reading

Government

Mistakes Were Made

Mistakes Were Made

Authored by C.J.Hopkins via The Consent Factory,

Make fun of the Germans all you want, and I’ve certainly done that…

Published

20 hours ago

on

March 17, 2024

By

Mistakes Were Made

Authored by C.J.Hopkins via The Consent Factory,

Make fun of the Germans all you want, and I’ve certainly done that a bit during these past few years, but, if there’s one thing they’re exceptionally good at, it’s taking responsibility for their mistakes. Seriously, when it comes to acknowledging one’s mistakes, and not rationalizing, or minimizing, or attempting to deny them, and any discomfort they may have allegedly caused, no one does it quite like the Germans.

Take this Covid mess, for example. Just last week, the German authorities confessed that they made a few minor mistakes during their management of the “Covid pandemic.” According to Karl Lauterbach, the Minister of Health, “we were sometimes too strict with the children and probably started easing the restrictions a little too late.” Horst Seehofer, the former Interior Minister, admitted that he would no longer agree to some of the Covid restrictions today, for example, nationwide nighttime curfews. “One must be very careful with calls for compulsory vaccination,” he added. Helge Braun, Head of the Chancellery and Minister for Special Affairs under Merkel, agreed that there had been “misjudgments,” for example, “overestimating the effectiveness of the vaccines.”

This display of the German authorities’ unwavering commitment to transparency and honesty, and the principle of personal honor that guides the German authorities in all their affairs, and that is deeply ingrained in the German character, was published in a piece called “The Divisive Virus” in Der Spiegel, and immediately widely disseminated by the rest of the German state and corporate media in a totally organic manner which did not in any way resemble one enormous Goebbelsian keyboard instrument pumping out official propaganda in perfect synchronization, or anything creepy and fascistic like that.

Germany, after all, is “an extremely democratic state,” with freedom of speech and the press and all that, not some kind of totalitarian country where the masses are inundated with official propaganda and critics of the government are dragged into criminal court and prosecuted on trumped-up “hate crime” charges.

OK, sure, in a non-democratic totalitarian system, such public “admissions of mistakes” — and the synchronized dissemination thereof by the media — would just be a part of the process of whitewashing the authorities’ fascistic behavior during some particularly totalitarian phase of transforming society into whatever totalitarian dystopia they were trying to transform it into (for example, a three-year-long “state of emergency,” which they declared to keep the masses terrorized and cooperative while they stripped them of their democratic rights, i.e., the ones they hadn’t already stripped them of, and conditioned them to mindlessly follow orders, and robotically repeat nonsensical official slogans, and vent their impotent hatred and fear at the new “Untermenschen” or “counter-revolutionaries”), but that is obviously not the case here.

No, this is definitely not the German authorities staging a public “accountability” spectacle in order to memory-hole what happened during 2020-2023 and enshrine the official narrative in history. There’s going to be a formal “Inquiry Commission” — conducted by the same German authorities that managed the “crisis” — which will get to the bottom of all the regrettable but completely understandable “mistakes” that were made in the heat of the heroic battle against The Divisive Virus!

OK, calm down, all you “conspiracy theorists,” “Covid deniers,” and “anti-vaxxers.” This isn’t going to be like the Nuremberg Trials. No one is going to get taken out and hanged. It’s about identifying and acknowledging mistakes, and learning from them, so that the authorities can manage everything better during the next “pandemic,” or “climate emergency,” or “terrorist attack,” or “insurrection,” or whatever.

For example, the Inquiry Commission will want to look into how the government accidentally declared a Nationwide State of Pandemic Emergency and revised the Infection Protection Act, suspending the German constitution and granting the government the power to rule by decree, on account of a respiratory virus that clearly posed no threat to society at large, and then unleashed police goon squads on the thousands of people who gathered outside the Reichstag to protest the revocation of their constitutional rights.

Once they do, I’m sure they’ll find that that “mistake” bears absolutely no resemblance to the Enabling Act of 1933, which suspended the German constitution and granted the government the power to rule by decree, after the Nazis declared a nationwide “state of emergency.”

Another thing the Commission will probably want to look into is how the German authorities accidentally banned any further demonstrations against their arbitrary decrees, and ordered the police to brutalize anyone participating in such “illegal demonstrations.”

And, while the Commission is inquiring into the possibly slightly inappropriate behavior of their law enforcement officials, they might want to also take a look at the behavior of their unofficial goon squads, like Antifa, which they accidentally encouraged to attack the “anti-vaxxers,” the “Covid deniers,” and anyone brandishing a copy of the German constitution.

Come to think of it, the Inquiry Commission might also want to look into how the German authorities, and the overwhelming majority of the state and corporate media, accidentally systematically fomented mass hatred of anyone who dared to question the government’s arbitrary and nonsensical decrees or who refused to submit to “vaccination,” and publicly demonized us as “Corona deniers,” “conspiracy theorists,” “anti-vaxxers,” “far-right anti-Semites,” etc., to the point where mainstream German celebrities like Sarah Bosetti were literally describing us as the inessential “appendix” in the body of the nation, quoting an infamous Nazi almost verbatim.

And then there’s the whole “vaccination” business. The Commission will certainly want to inquire into that. They will probably want to start their inquiry with Karl Lauterbach, and determine exactly how he accidentally lied to the public, over and over, and over again …

And whipped people up into a mass hysteria over “KILLER VARIANTS” …

And “LONG COVID BRAIN ATTACKS” …

And how “THE UNVACCINATED ARE HOLDING THE WHOLE COUNTRY HOSTAGE, SO WE NEED TO FORCIBLY VACCINATE EVERYONE!”

And so on. I could go on with this all day, but it will be much easier to just refer you, and the Commission, to this documentary film by Aya Velázquez. Non-German readers may want to skip to the second half, unless they’re interested in the German “Corona Expert Council” …

Look, the point is, everybody makes “mistakes,” especially during a “state of emergency,” or a war, or some other type of global “crisis.” At least we can always count on the Germans to step up and take responsibility for theirs, and not claim that they didn’t know what was happening, or that they were “just following orders,” or that “the science changed.”

Plus, all this Covid stuff is ancient history, and, as Olaf, an editor at Der Spiegel, reminds us, it’s time to put the “The Divisive Pandemic” behind us …

… and click heels, and heil the New Normal Democracy!

Tyler Durden Sat, 03/16/2024 - 23:20

Read More

Continue Reading

Government

“Extreme Events”: US Cancer Deaths Spiked In 2021 And 2022 In “Large Excess Over Trend”

"Extreme Events": US Cancer Deaths Spiked In 2021 And 2022 In "Large Excess Over Trend"

Cancer deaths in the United States spiked in 2021…

Published

1 day ago

on

March 16, 2024

By

"Extreme Events": US Cancer Deaths Spiked In 2021 And 2022 In "Large Excess Over Trend"

Cancer deaths in the United States spiked in 2021 and 2022 among 15-44 year-olds "in large excess over trend," marking jumps of 5.6% and 7.9% respectively vs. a rise of 1.7% in 2020, according to a new preprint study from deep-dive research firm, Phinance Technologies.

Algeria, Carlos et. al "US -Death Trends for Neoplasms ICD codes: C00-D48, Ages 15-44", ResearchGate, March. 2024 P. 7

Extreme Events

The report, which relies on data from the CDC, paints a troubling picture.

"We show a rise in excess mortality from neoplasms reported as underlying cause of death, which started in 2020 (1.7%) and accelerated substantially in 2021 (5.6%) and 2022 (7.9%). The increase in excess mortality in both 2021 (Z-score of 11.8) and 2022 (Z-score of 16.5) are highly statistically significant (extreme events)," according to the authors.

That said, co-author, David Wiseman, PhD (who has 86 publications to his name), leaves the cause an open question - suggesting it could either be a "novel phenomenon," Covid-19, or the Covid-19 vaccine.

"The results indicate that from 2021 a novel phenomenon leading to increased neoplasm deaths appears to be present in individuals aged 15 to 44 in the US," reads the report.

The authors suggest that the cause may be the result of "an unexpected rise in the incidence of rapidly growing fatal cancers," and/or "a reduction in survival in existing cancer cases."

They also address the possibility that "access to utilization of cancer screening and treatment" may be a factor - the notion that pandemic-era lockdowns resulted in fewer visits to the doctor. Also noted is that "Cancers tend to be slowly-developing diseases with remarkably stable death rates and only small variations over time," which makes "any temporal association between a possible explanatory factor (such as COVID-19, the novel COVID-19 vaccines, or other factor(s)) difficult to establish."

That said, a ZeroHedge review of the CDC data reveals that it does not provide information on duration of illness prior to death - so while it's not mentioned in the preprint, it can't rule out so-called 'turbo cancers' - reportedly rapidly developing cancers, the existence of which has been largely anecdotal (and widely refuted by the usual suspects).

While the Phinance report is extremely careful not to draw conclusions, researcher "Ethical Skeptic" kicked the barn door open in a Thursday post on X - showing a strong correlation between "cancer incidence & mortality" coinciding with the rollout of the Covid mRNA vaccine.

Phinance principal Ed Dowd commented on the post, noting that "Cancer is suddenly an accelerating growth industry!"

Continued:

Bottom line - hard data is showing alarming trends, which the CDC and other agencies have a requirement to explore and answer truthfully - and people are asking #WhereIsTheCDC.

We aren't holding our breath.

Wiseman, meanwhile, points out that Pfizer and several other companies are making "significant investments in cancer drugs, post COVID."

Phinance

We've featured several of Phinance's self-funded deep dives into pandemic data that nobody else is doing. If you'd like to support them, click here.

 

Tyler Durden Sat, 03/16/2024 - 16:55

Read More

Continue Reading

Trending