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28 Jun 2024

According to BofA fund managers survey, the biggest tail risk is still higher inflation.

WHAT IF the true risk is UNDERESTIMATING the current disinflation trend? PCE numbers today will give us more clue about where inflation is going next? Source: Ryan Detrick

28 Jun 2024

BREAKING: Walgreens stock, $WBA, crashes nearly 25% after drugstore chain cuts profit guidance due to "challenging" consumer environment.

"We assumed the consumer would get somewhat stronger” but “that is not the case,” Walgreens CEO said. Walgreens cut their earnings per share outlook by 12.5% yesterday. The stock is now down 88% from its all time high and 55% in 2024. Another sign that consumers are struggling? Source: The Kobeissi Letter

26 Jun 2024

🚨CANADA INFLATION UNEXPECTEDLY RE-ACCELERATES.

May CPI +2.9% vs 2.6% expected. Did they cut rates too soon? Should the Fed worry about cutting too soon as well? Source: CTV News

25 Jun 2024

BREAKING: The CBO has raised the US government's deficit forecast for Fiscal Year 2024 from $1.5 trillion to $1.9 trillion, or 6.7% of GDP.

This would be the highest deficit since 2021 when the deficit hit $2.8 trillion in response to pandemic lockdowns. By 2034, the deficit is expected to reach $2.9 trillion or 6.9% of GDP, totaling a whopping $22.1 trillion over the 2025-2034 period. The CBO projection also assumes that net interest will reflect over 50% of the budget deficit over the next decade. These numbers all assume no recessions and lower interest rates. What happens if rate cuts are delayed and a recession hits? Source: The Kobeissi Letter, CBO

21 Jun 2024

The Citi US economic surprise index has fallen to about the most negative since 2022

h/t @daniburgz, Liz Abramowitz, Bloomberg

17 Jun 2024

#china #macro: Retail sales beat expectations

The strong growth in retail spending is particularly notable given the continued pressure on the property sector, with negative spillovers to household sentiment. It’s probably a relief to a government looking to reset the economy over time. Source: CNBC. Bloomberg, Mohamed El Erian

14 Jun 2024

There are 3 sure things in life: death, taxes… and the rise of National debt (whoever is in the White House)

Source: EricOfRivia⚡️🍕

13 Jun 2024

BREAKING >>> The Fed held rates unchanged as expected...

*FED HOLDS BENCHMARK RATE IN 5.25-5.5% TARGET RANGE And changed wording on inflation (from a "lack" of progress): *FED: INFLATION MADE MODEST FURTHER PROGRESS IN RECENT MONTHS BUT... The dot-plot was hawkish, adjust to just one 25bps cut in 2024 (and four 25bps cuts in 2025) *FOMC MEDIAN FORECAST SHOWS 25 BPS RATE CUTS IN '24 VS 75 BPS *FOMC MEDIAN FORECAST SHOWS 100 BPS RATE CUTS IN '25 VS 75 BPS There is another notable development: The longer-run estimate of the federal funds rate has gone up to 2.8% now, in the median forecast. That’s the second straight increase. Last time it had ticked up to 2.6% from 2.5%. So, in six months, policymakers have added more than a quarter percentage point to where they see the benchmark rate over the longer haul -- the so-called neutral rate. Additionally, The Fed increased its end-2024 expectations for inflation...but kept its unemployment expectations unchanged... There were 10 Fed members who saw rates at 4.625% or below by end 2024 in March... now there are none... There were NO dissents today, extending the streak of zero votes against the FOMC policy decision to 16 meetings, the longest period of no dissents since Alan Greenspan’s 17-meeting streak from August 2003 to September 2005. Today’s reassuring CPI report was relayed to FOMC members during the meeting, but many may be waiting for additional inputs (eg, PPI, PCE) before changing their forecasts. Bottom-line: The Fed re-arranged 2024-2025 dots from (2+3) to (1+4), and marked-to market their Core PCE forecast for year-end - signalling they are just being extra careful, and want some more evidence before committing to a cut. On our side, we still expect monetary policy to normalize in the months to come. We expect the Fed to continue their "meeting by meeting" approach with our base case being a cut in September. Indeed, it will take at least several more months of data to gain confidence that inflation is behaving in a manner the Fed finds acceptable. One key takeaway from today is that there’s a significant number of FOMC members that may prefer to wait even longer than September if upcoming data do not give them additional cover. Source: Bloomberg, www.zerohedge.com

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