Connect with us

Week Ahead – Market Volatility to remain elevated

Global stocks are all over the place as some indexes fall into correction as others continue to extend higher into record territory.  The bond market volatility surprised many investors as the growth outlook took a massive hit as the spread of the Delta..

Published

3 years ago

on

Global stocks are all over the place as some indexes fall into correction as others continue to extend higher into record territory.  The bond market volatility surprised many investors as the growth outlook took a massive hit as the spread of the Delta coronavirus variant showed many countries are still struggling to return to normal.

Asian stocks should have a strong open following the PBOC’s RRR cut.  This is quite the pivot by the central bank and it should support the notion that crackdown over tech companies will probably ease.  The yuan could be vulnerable following the RRR cut and that should be great news for exports.

The upcoming week is filled with many potential market moving events.  A wrath of rate decisions (BOJ, BOC, RBNZ, and CBRT) will continue to show the unbalanced global economic  recovery has some banks tapering, others poised for further cuts, and some stuck in wait-and-see mode.  Traders will also closely watch three big economic releases: US CPI, China’s Q2 GDP, and US retail sales, which could show some weakness persisting across the world’s two largest economies.   The banks will also kickoff earnings season and that should come with a better understanding of how strong is the US consumer.  Fed Chair Powell will give his semi-annual Monetary Policy Report to Congress. Since Powell’s testimony will happen after the latest inflation report and fresh concerns about the pace of the global economic recovery, it could have a dovish outcome.

Focus on Powell’s testimony, US inflation and retail sales, and bank earnings

Will China’s growth slip further than expectations?

Gold tries to get its groove back

 

Country

US

Next week is a jammed pack week with CPI data, key testimony from Fed Chair Powell, and the beginning of earnings season.  It will be a busy week of Fed speak as Quarles, Kashkari, Evans and Williams will all be making the rounds.

Tuesday will be a busy morning with the June inflation report expected to show inflationary pressures ease. The June month over month reading is expected to tick lower to 0.5%, while the year over year headline eases from 5.0% to 4.9%.  Earnings season officially begins with early reports from Pepsico, JPMorgan, Fastenal and Goldman Sachs.  Wall Street will closely listen to what the banks have to say about the US consumer.

On Thursday, Fed Chair Powell will deliver his semi-annual testimony to the Senate Banking Panel.  This could be big because Powell may start to see some easing of pricing pressures and further reasons to become slightly pessimistic to the short-term global growth outlook.  If Powell confirms his conservative, somewhat noncommittal approach to tapering, we could see Treasury yields remain heavy.

The June retail sales reading will draw a lot of attention on Friday given the big miss last month.  Investors will look to see if this trend continues.

EU

Europe’s battle with Covid is, unfortunately, far from over. The World Health Organization has warned that a new wave of Covid in Europe is inevitable, with cases of the Delta variant on the rise.

The resurgence of Covid could have a devastating effect on the summer tourist season. France has warned its citizens against vacationing in Spain in Portugal, and other countries could follow suit with advisories against travelling to certain European countries.

The International Conference on Climate will take place in Venice on Sunday, July 11. ECB President and the Fed’s Quarles will be among the key speakers.

On Monday, eurozone finance minister will meet in Brussels to discuss economic and financial issues affecting the eurozone. US Treasury Secretary Janet Yellen will be in attendance.

The EU Foreign Affairs Council will also meet in Brussels. The agenda will include geopolitical hotspots, including Afghanistan, South Caucasus, Lebanon, Ethiopia, as well as digital technologies. The Council will also hold a working lunch with Israeli foreign minister Lapid.

German Chancellor Merkel will host Ukrainian President Zelenskiy in Berlin. The two leaders will discuss the Nord Stream 2 gas pipeline, which runs between Russia and Germany, as well as the conflict in Ukraine’s Donbas region.

On Tuesday, Germany releases the June CPI report.

On Wednesday, European Commission President Ursula von der Leyen and Commissioner for Budget Johannes Hahn host a press conference in Brussels. European Commission Vice President will discuss an EU digital tax, which the US opposes.

The European Commission will recommend new measures under its Green Deal plan, including expanding the EU’s carbon market. These proposals follow the endorsement of EU’s new Climate Law, which increases the bloc’s 2030 emissions reductions target.

France celebrates Bastille Day, with financial markets to remain open.

The eurozone releases Industrial Production for May.

On Thursday, Germany Chancellor Angela Merkel visits the White House and will meet with President Joe Biden. The agenda will include tensions over the Nord Stream 2 pipeline, which carries natural gas from Russia to Germany.

The eurozone releases CPI YoY readings on Friday, which could slip from 2.0% to 1.9%. The Core CPI YoY reading is expected to remain unchanged at 0.9%.

Sweden

On Tuesday, Sweden Riksbank Governor Stefan Ingves will join in a panel discussion at a virtual conference in Jerusalem, entitled “Inflation: Dynamics, Expectations, and Targeting.

UK

On Sunday, July 14, Prime Minister Boris Johnson is expected to confirm the decision to end most health restrictions in England, commencing on July 19. The UK has been hit with a surge in cases of the Covid delta variant, but Johnson is keen to reopen the economy.

On Wednesday, the UK releases June CPI YoY. The consensus is 2.3%, vs 2.1% in the May report. The monthly reading is expected to ease from 0.6% to 0.1%.  BOE Deputy Governor David Ramsden speaks at the Strand Group, in an event co-sponsored by King’s Business School.

On Thursday, the UK publishes the and the Unemployment Rate for May and Unemployment Claims for June. Also, BOE member Michael Saunders delivers a speech on the U.K. inflation outlook.

 

Emerging Markets

Poland

Poland will release the June CPI report on Thursday.  The June CPI Core YoY reading is expected to decline from 4.0% to 3.7%.

South Africa

On Tuesday, South Africa will release gold, platinum and mining production for May.

Turkey

On Tuesday, Turkey releases Industrial Production for May.

Turkey’s central bank will hold a policy meeting on Wednesday, with analysts unanimously expecting the 1-week repo rate to remain steady at 19.00%. The central bank governor has promised to maintain interest rates above inflation until there is a permanent drop in price growth. Last week, the bank reiterated its projection that inflation will ease considerably in Q3 of 2021 and into Q4. The bank noted that the vaccine rollout is going well and has boosted economic activity.

ASIA Pacific

China

The Hang Seng Index tumbled into bear market territory as China’s technology crackdown continues to weigh on sentiment.  Given some economic data softness, the economy was clearly in need of some support and the PBOC delivered a well telegraphed RRR cut that will help boost lending.

The aftermath of the RRR cut could provide some support for the dollar against the yuan.

Investors will closely watch Tuesday’s release of trade data that could show exports and imports significantly pullback from elevated levels.  The main economic data release of next week will be China’s second quarter GDP reading.  The world’s second largest economy is expected to see a significant slowdown in the second quarter as GDP declines from 18.3% to around 8.0%.

India

India’s COVID-19 cases were appearing to be on the right track but a recent increase in cases have many worried that a third wave could be coming.  Until COVID cases start trending lower, the Indian rupee still remains vulnerable to the dollar.  A pullback with oil prices has provided some modest support for the rupee.

On Monday, India will release both Industrial production and CPI data. Pricing pressures continue to climb higher further above the RBI’s target range.  The June CPI YoY reading is expected to rise from 6.3% to 6.6%.  Base effects have distorted industrial production and the May reading will come back down to earth, dropping from 134.4% to 32.0%.

Australia & New Zealand

The AUD/USD and NZD/USD have performed poorly again for another week as global risk sentiment took a turn for the worse.  In Australia, traders will closely monitor Wednesday’s jobs data that should see the unemployment rate tick lower to 5.0%, with a gain of around 20,000 jobs.

A key event for the week will be the upcoming RBNZ rate decision.  The middle of the week policy meeting is widely expected to see the bank maintain the official cash rate at 0.25%, but they could possibly signal earlier tightening.

Both the Aussie dollar and kiwi will still closely observe what happens with the broader market risk appetite tone, which could take a lead following the release of China’s second quarter GDP reading on Thursday.

Japan

Risk appetite for Japanese assets took a big hit after news that fans will be banned at the Summer Olympics.  Japan is clearly still in the middle of its fight against COVID and the decision to declare a state of emergency through August 22nd will dramatically force investors to downgrade their growth forecasts.

The Nikkei 225 has weakened over 10% from the February peak and investors will closely watch to see how strongly the dip is bought.  The Japanese yen is tentatively finding support from the 50-day SMA, but if risk aversion reigns supreme early next week, price action could support a decline towards 109.20.

Markets

Oil

Following the worst week in a few months, crude prices may remain vulnerable if more countries continue to eye semi-lockdowns.  With international travel not coming back anytime soon and the US slowly passing peak driving season, the demand side does not provide such a rosy picture anymore.

Much of the energy market is awaiting to see what happens with Iran’s crude output.  Nothing is officially scheduled, but the seventh round of indirect US-Iran talks could resume and that could impact the next major move for oil prices.

Gold

The bond market rally has been gold’s best friend.  Much of Wall Street was behind the reflation trade and eagerly anticipated a steeper Treasury curve.  Yields are poised to bounce back some and that should be a slight headwind for gold prices.

Gold was already starting to see central bank demand improve and if ETF demand turns positive again, bullion bulls could become more aggressive with their bets.  The line in the sand for gold is the $1,800 level and if prices can remain elevated post the latest US CPI report, that could be the greenlight needed for many traders.

Bitcoin

Bitcoin remains trapped between the $30,000.00 and $40,000.00 trading range but extended weakness could persist if the market keeps getting unnerved following continued headlines over the crackdown from Beijing and persistent worries about its massive carbon footprint problem.  Despite all the uncertainty over transitioning mining activity away from China, questions on whether miners are using optimal renewable energy, and nervousness over regulatory concerns from the US, cryptocurrencies continue to make progress in payment adoption and attract new investors.  If Bitcoin can maintain this consolidation pattern, longer-term bullish bets may start to return.

Key Economic Events

Saturday, July 10

-The Group of 20 finance ministers and central bank chiefs finish a two-day summit in Venice, Italy.

Sunday, July 11

– ECB President Lagarde and Fed Vice Chair for Supervision Quarles to speak at the Venice International Conference on Climate.

Monday, July 12

– Eurozone finance ministers, the Eurogroup, and US Treasury Secretary Yellen meet in Brussels

-UK PM Johnson to confirm a final decision on ending most restrictions in England for July 19th.

– Ukrainian President Zelenskiy to meet with German Chancellor Merkel to talk about the Nord Stream 2 gas pipeline and the conflict in Donbas.

Economic Data/Events:

  • India industrial production, CPI
  • Mexico Industrial production
  • Japan core machine orders, PPI
  • Russia Trade Balance
  • South Africa manufacturing production
  • Denmark CPI
  • Turkey Unemployment
  • Sweden Unemployment

Tuesday, July 13

– Fed presidents Kashkari (Minneapolis,) Bostic (Atlanta,) and Rosengren (Boston.) speak on racism and the economy with a focus on criminal justice.

-Sweden Riksbank Governor Ingves speaks at the conference “Inflation: Dynamics, Expectations, and Targeting.”

Economic Data/Events:

  • US Earnings Season begins with JPMorgan and Goldman Sachs reporting before the opening bell
  • US June CPI M/M: 0.5%e v 0.6% prior; Y/Y: 4.9%e v 5.0% prior
  • Germany CPI
  • Czech Republic CPI
  • Australia NAB business confidence
  • China Trade, medium-term lending facility rate
  • New Zealand food prices
  • Turkey Industrial production
  • South Africa gold, platinum, and mining production

Wednesday, July 14

– European Commission President von der Leyen and Commissioner for Budget Hahn speak in in Brussels.

– BOE Deputy Governor Ramsden speaks at the Strand Group, in conjunction with King’s Business School.

– Minneapolis Fed President Kashkari speaks

– US House Financial Services committee holds a hearing on monetary policy and the state of economy.

– France celebrates Bastille Day.

Economic Data/Events:

  • US PPI, Fed Beige Book
  • Earnings Season Reports from Bank of America, Citigroup, Wells Fargo
  • Australia Westpac consumer confidence
  • Canada BOC Rate decision: To deliver another round of bond tapering
  • Turkey (CBRT) Rate Decision: To keep rates steady, prospects of rate cuts likely to be later in the year
  • New Zealand (RBNZ) Rate Decision: To keep rates steady and possibly show willingness to tighten near year end
  • UK CPI
  • Sweden CPI
  • Russia CPI
  • Eurozone Industrial production
  • Japan Industrial production
  • India wholesale prices
  • Singapore GDP
  • South Africa retail sales
  • Canada manufacturing sales
  • Poland Current account
  • EIA crude oil inventory report

Thursday, July 15

–  Fed Chair Powell to deliver the semi-annual Monetary Policy Report to Congress

– Germany Chancellor Merkel meets President Joe Biden in the White House

– RBI Governor Das, finance ministry officials and company executives will attend the two-day, online Economic Times Financial Inclusion summit.

-BOE policy maker Michael Saunders speaks on the U.K. inflation outlook.

-Chicago Fed President Charles Evans discusses the U.S. economy at the annual Rocky Mountain Economic Summit.

Economic Data/Events:

  • US initial jobless claims, Empire manufacturing, industrial production
  • China Q2 GDP Q/Q: 1.2%e v 0.6% prior; Y/Y: 8.0%e v 18.3% prior
  • UK jobless claims, unemployment
  • Poland CPI
  • Italy CPI
  • Canada existing home sales
  • China new home prices, retail sales, surveyed jobless rate, industrial production
  • Australia unemployment, RBA FX transactions
  • India Trade
  • Japan tertiary industry index
  • Russia gold and forex reserves
  • OPEC Monthly Oil report

Friday, July 16

– New York Fed President Williams and First Vice President Hassan speak at an event hosted by the New York Fed about culture in a post-pandemic workplace.

Economic Data/Events:

  • US Jun retail sales: -0.5%e v -1.3% prior, Tic Flow data, July Prelim Univ. of Michigan consumer sentiment: 86.5e v 85.5 prior
  • Bank of Japan (BOJ) Interest Rate Decision: No change to monetary policy, could downgrade growth forecasts
  • BOJ Gov Kuroda rate decision press conference
  • Eurozone CPI
  • Poland CPI
  • New Zealand CPI
  • Canada housing starts, wholesale trade sales
  • Eurozone new car registrations
  • Eurozone Trade
  • New Zealand manufacturing PMI
  • Singapore electronic exports
  • Thailand foreign reserves, forward contracts
  • Russia PPI
  • Turkey budget balance, house prices

Sovereign Rating Update:

– Greece (Fitch)

– EFSF (Fitch)

– ESM (Fitch)

– Russia(S&P)

– Finland (Moody’s)

– Ireland (DBRS)

– Netherlands (DBRS)

 

Read More

Related Topics:
Continue Reading

International

Analyst reviews Apple stock price target amid challenges

Here’s what could happen to Apple shares next.

Published

7 hours ago

on

March 12, 2024

By

They said it was bound to happen.

It was Jan. 11, 2024 when software giant Microsoft  (MSFT)  briefly passed Apple  (AAPL)  as the most valuable company in the world.

Microsoft's stock closed 0.5% higher, giving it a market valuation of $2.859 trillion. 

It rose as much as 2% during the session and the company was briefly worth $2.903 trillion. Apple closed 0.3% lower, giving the company a market capitalization of $2.886 trillion. 

"It was inevitable that Microsoft would overtake Apple since Microsoft is growing faster and has more to benefit from the generative AI revolution," D.A. Davidson analyst Gil Luria said at the time, according to Reuters.

The two tech titans have jostled for top spot over the years and Microsoft was ahead at last check, with a market cap of $3.085 trillion, compared with Apple's value of $2.684 trillion.

Analysts noted that Apple had been dealing with weakening demand, including for the iPhone, the company’s main source of revenue. 

Demand in China, a major market, has slumped as the country's economy makes a slow recovery from the pandemic and competition from Huawei.

Sales in China of Apple's iPhone fell by 24% in the first six weeks of 2024 compared with a year earlier, according to research firm Counterpoint, as the company contended with stiff competition from a resurgent Huawei "while getting squeezed in the middle on aggressive pricing from the likes of OPPO, vivo and Xiaomi," said senior Analyst Mengmeng Zhang.

“Although the iPhone 15 is a great device, it has no significant upgrades from the previous version, so consumers feel fine holding on to the older-generation iPhones for now," he said.

A man scrolling through Netflix on an Apple iPad Pro. Photo by Phil Barker/Future Publishing via Getty Images.

Future Publishing/Getty Images

Big plans for China

Counterpoint said that the first six weeks of 2023 saw abnormally high numbers with significant unit sales being deferred from December 2022 due to production issues.

Apple is planning to open its eighth store in Shanghai – and its 47th across China – on March 21.

Related: Tech News Now: OpenAI says Musk contract 'never existed', Xiaomi's EV, and more

The company also plans to expand its research centre in Shanghai to support all of its product lines and open a new lab in southern tech hub Shenzhen later this year, according to the South China Morning Post.

Meanwhile, over in Europe, Apple announced changes to comply with the European Union's Digital Markets Act (DMA), which went into effect last week, Reuters reported on March 12.

Beginning this spring, software developers operating in Europe will be able to distribute apps to EU customers directly from their own websites instead of through the App Store.

"To reflect the DMA’s changes, users in the EU can install apps from alternative app marketplaces in iOS 17.4 and later," Apple said on its website, referring to the software platform that runs iPhones and iPads. 

"Users will be able to download an alternative marketplace app from the marketplace developer’s website," the company said.

Apple has also said it will appeal a $2 billion EU antitrust fine for thwarting competition from Spotify  (SPOT)  and other music streaming rivals via restrictions on the App Store.

The company's shares have suffered amid all this upheaval, but some analysts still see good things in Apple's future.

Bank of America Securities confirmed its positive stance on Apple, maintaining a buy rating with a steady price target of $225, according to Investing.com. 

The firm's analysis highlighted Apple's pricing strategy evolution since the introduction of the first iPhone in 2007, with initial prices set at $499 for the 4GB model and $599 for the 8GB model.

BofA said that Apple has consistently launched new iPhone models, including the Pro/Pro Max versions, to target the premium market. 

Analyst says Apple selloff 'overdone'

Concurrently, prices for previous models are typically reduced by about $100 with each new release. 

This strategy, coupled with installment plans from Apple and carriers, has contributed to the iPhone's installed base reaching a record 1.2 billion in 2023, the firm said.

More Tech Stocks:

Apple has effectively shifted its sales mix toward higher-value units despite experiencing slower unit sales, BofA said.

This trend is expected to persist and could help mitigate potential unit sales weaknesses, particularly in China. 

BofA also noted Apple's dominance in the high-end market, maintaining a market share of over 90% in the $1,000 and above price band for the past three years.

The firm also cited the anticipation of a multi-year iPhone cycle propelled by next-generation AI technology, robust services growth, and the potential for margin expansion.

On Monday, Evercore ISI analysts said they believed that the sell-off in the iPhone maker’s shares may be “overdone.”

The firm said that investors' growing preference for AI-focused stocks like Nvidia  (NVDA)  has led to a reallocation of funds away from Apple. 

In addition, Evercore said concerns over weakening demand in China, where Apple may be losing market share in the smartphone segment, have affected investor sentiment.

And then ongoing regulatory issues continue to have an impact on investor confidence in the world's second-biggest company.

“We think the sell-off is rather overdone, while we suspect there is strong valuation support at current levels to down 10%, there are three distinct drivers that could unlock upside on the stock from here – a) Cap allocation, b) AI inferencing, and c) Risk-off/defensive shift," the firm said in a research note.

Related: Veteran fund manager picks favorite stocks for 2024

Read More

Continue Reading

International

Major typhoid fever surveillance study in sub-Saharan Africa indicates need for the introduction of typhoid conjugate vaccines in endemic countries

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high…

Published

7 hours ago

on

March 12, 2024

By

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

Credit: IVI

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

 

The findings from this 4-year study, the Severe Typhoid in Africa (SETA) program, offers new typhoid fever burden estimates from six countries: Burkina Faso, Democratic Republic of the Congo (DRC), Ethiopia, Ghana, Madagascar, and Nigeria, with four countries recording more than 100 cases for every 100,000 person-years of observation, which is considered a high burden. The highest incidence of typhoid was found in DRC with 315 cases per 100,000 people while children between 2-14 years of age were shown to be at highest risk across all 25 study sites.

 

There are an estimated 12.5 to 16.3 million cases of typhoid every year with 140,000 deaths. However, with generic symptoms such as fever, fatigue, and abdominal pain, and the need for blood culture sampling to make a definitive diagnosis, it is difficult for governments to capture the true burden of typhoid in their countries.

 

“Our goal through SETA was to address these gaps in typhoid disease burden data,” said lead author Dr. Florian Marks, Deputy Director General of the International Vaccine Institute (IVI). “Our estimates indicate that introduction of TCV in endemic settings would go to lengths in protecting communities, especially school-aged children, against this potentially deadly—but preventable—disease.”

 

In addition to disease incidence, this study also showed that the emergence of antimicrobial resistance (AMR) in Salmonella Typhi, the bacteria that causes typhoid fever, has led to more reliance beyond the traditional first line of antibiotic treatment. If left untreated, severe cases of the disease can lead to intestinal perforation and even death. This suggests that prevention through vaccination may play a critical role in not only protecting against typhoid fever but reducing the spread of drug-resistant strains of the bacteria.

 

There are two TCVs prequalified by the World Health Organization (WHO) and available through Gavi, the Vaccine Alliance. In February 2024, IVI and SK bioscience announced that a third TCV, SKYTyphoid™, also achieved WHO PQ, paving the way for public procurement and increasing the global supply.

 

Alongside the SETA disease burden study, IVI has been working with colleagues in three African countries to show the real-world impact of TCV vaccination. These studies include a cluster-randomized trial in Agogo, Ghana and two effectiveness studies following mass vaccination in Kisantu, DRC and Imerintsiatosika, Madagascar.

 

Dr. Birkneh Tilahun Tadesse, Associate Director General at IVI and Head of the Real-World Evidence Department, explains, “Through these vaccine effectiveness studies, we aim to show the full public health value of TCV in settings that are directly impacted by a high burden of typhoid fever.” He adds, “Our final objective of course is to eliminate typhoid or to at least reduce the burden to low incidence levels, and that’s what we are attempting in Fiji with an island-wide vaccination campaign.”

 

As more countries in typhoid endemic countries, namely in sub-Saharan Africa and South Asia, consider TCV in national immunization programs, these data will help inform evidence-based policy decisions around typhoid prevention and control.

 

###

 

About the International Vaccine Institute (IVI)
The International Vaccine Institute (IVI) is a non-profit international organization established in 1997 at the initiative of the United Nations Development Programme with a mission to discover, develop, and deliver safe, effective, and affordable vaccines for global health.

IVI’s current portfolio includes vaccines at all stages of pre-clinical and clinical development for infectious diseases that disproportionately affect low- and middle-income countries, such as cholera, typhoid, chikungunya, shigella, salmonella, schistosomiasis, hepatitis E, HPV, COVID-19, and more. IVI developed the world’s first low-cost oral cholera vaccine, pre-qualified by the World Health Organization (WHO) and developed a new-generation typhoid conjugate vaccine that is recently pre-qualified by WHO.

IVI is headquartered in Seoul, Republic of Korea with a Europe Regional Office in Sweden, a Country Office in Austria, and Collaborating Centers in Ghana, Ethiopia, and Madagascar. 39 countries and the WHO are members of IVI, and the governments of the Republic of Korea, Sweden, India, Finland, and Thailand provide state funding. For more information, please visit https://www.ivi.int.

 

CONTACT

Aerie Em, Global Communications & Advocacy Manager
+82 2 881 1386 | aerie.em@ivi.int

Journal

The Lancet Global Health

Method of Research

Observational study

Subject of Research

People

Article Title

Incidence of typhoid fever in Burkina Faso, Democratic Republic of the Congo, Ethiopia, Ghana, Madagascar, and Nigeria (the Severe Typhoid in Africa programme): a population-based study

Article Publication Date

12-Mar-2024

Read More

Continue Reading

International

US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

Earlier today, CNBC’s…

Published

8 hours ago

on

March 12, 2024

By

US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever... And Debt Explodes

Earlier today, CNBC's Brian Sullivan took a horse dose of Red Pills when, about six months after our readers, he learned that the US is issuing $1 trillion in debt every 100 days, which prompted him to rage tweet, (or rageX, not sure what the proper term is here) the following:

We’ve added 60% to national debt since 2018. Germany - a country with major economic woes - added ‘just’ 32%.   

Maybe it will never matter.   Maybe MMT is real.   Maybe we just cancel or inflate it out. Maybe career real estate borrowers or career politicians aren’t the answer.

I have no idea.  Only time will tell.   But it’s going to be fascinating to watch it play out.

He is right: it will be fascinating, and the latest budget deficit data simply confirmed that the day of reckoning will come very soon, certainly sooner than the two years that One River's Eric Peters predicted this weekend for the coming "US debt sustainability crisis."

According to the US Treasury, in February, the US collected $271 billion in various tax receipts, and spent $567 billion, more than double what it collected.

The two charts below show the divergence in US tax receipts which have flatlined (on a trailing 6M basis) since the covid pandemic in 2020 (with occasional stimmy-driven surges)...

... and spending which is about 50% higher compared to where it was in 2020.

The end result is that in February, the budget deficit rose to $296.3 billion, up 12.9% from a year prior, and the second highest February deficit on record.

And the punchline: on a cumulative basis, the budget deficit in fiscal 2024 which began on October 1, 2023 is now $828 billion, the second largest cumulative deficit through February on record, surpassed only by the peak covid year of 2021.

But wait there's more: because in a world where the US is spending more than twice what it is collecting, the endgame is clear: debt collapse, and while it won't be tomorrow, or the week after, it is coming... and it's also why the US is now selling $1 trillion in debt every 100 days just to keep operating (and absorbing all those millions of illegal immigrants who will keep voting democrat to preserve the socialist system of the US, so beloved by the Soros clan).

And it gets even worse, because we are now in the ponzi finance stage of the Minsky cycle, with total interest on the debt annualizing well above $1 trillion, and rising every day

... having already surpassed total US defense spending and soon to surpass total health spending and, finally all social security spending, the largest spending category of all, which means that US debt will now rise exponentially higher until the inevitable moment when the US dollar loses its reserve status and it all comes crashing down.

We conclude with another observation by CNBC's Brian Sullivan, who quotes an email by a DC strategist...

.. which lays out the proposed Biden budget as follows:

The budget deficit will growth another $16 TRILLION over next 10 years. Thats *with* the proposed massive tax hikes.

Without them the deficit will grow $19 trillion.

That's why you will hear the "deficit is being reduced by $3 trillion" over the decade.

No family budget or business could exist with this kind of math.

Of course, in the long run, neither can the US... and since neither party will ever cut the spending which everyone by now is so addicted to, the best anyone can do is start planning for the endgame.

Tyler Durden Tue, 03/12/2024 - 18:40

Read More

Continue Reading

Trending