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NASDAQ blows out to all time highs, while China falls into a deep recession. Bitcoin and Crypto remain a 'BlackRock' underwrite (stuck at 60K+) hedge for the pensions funds and U.S. president's, the oil price is caught between a China slowdown and a looming Iran/Israel war. Short end bond yields are up, as inflation appears to be returning. Did it ever go away?
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China's slowdown could be the 'one' this time, Chinese authorities stop reporting youth unemployment numbers. Eerily similar to when China underreported and stopped reporting COVID infections. Pointing to a severe recession for the Chinese economy. Australia will take a massive hit, all eyes on the AUD and Aust bonds.
*UPDATE* The Japanese YEN and Australian dollar (AUD) are now in freefall. With the YEN returning back to its 15 year lows. On the back of a China slowdown, which may turn into a recession. Food inflation is still sticky. *Update: RBA raises rate/s to 0.25% after April pause. AUD rallies. Central Banks return to tightening bias*
Self explanatory chart: Japanese yen falls to 37 year lows, on the back of U.S. Dollar strength and rising (short end) U.S. yields. Fed chairman fails to lift the YEN with dovish comments. MArkets are not buying the inflation fight is nearly over rhetoric. Remember, Japan is a net importer of oil. China 'slowdown' maybe stagflation lite.
The oil price is bid over 73, despite oil consumption from China and U.S. in freefall. Heading towards pandemic lows of 2020. China's construction industry could already have collapsed with a -9% plunge in oil usage. U.S., refineries are cutting 90% of storage capacity. Sounds recessionary? Except, an oil shock cannot be ruled out on Middle Eastern, Ukraine/Russia conflicts.
As Trump 2.0 with his tariff 6 shooter, but mostly bluff, trying to corner America's trading partners, may begin shooting off rounds. Threatens russia with 500% export tariff on Russian oil purchases, re: India and china. Copper prices plunge, on China slowdown and trump threats. Remember trade war to wars, peace through strength has never worked in history. bonus chart: 10 yr yields is still showing embedded inflation.
The oil price remains bid over $75, OPEC cuts and broader Middle Eastern war may push the price to $80. MArkets are overstretching expectations that rates will be cut in 2024 on a China/U.S. slowdown. Not with unemployment rates at all time lows and higher energy prices. Coffee futures are bid, Brazil is suffering from the worst drought in history. Climate Change should be priced into markets.
