DISCLAIMER
Trading involves the risk of loss of capital and is not suitable for everyone. As many companies provide high leverage you should be aware you could lose substantially more than your initial investment. The content of this daily newsletter should only be considered a guide and views, opinions or content contained in this email is provided solely for information purposes and does not constitute investment advice or a solicitation to trade or invest. Previous performance is no guarantee of future performance. You should carefully consider the inherent risks, your financial situation, your investment objectives, level of experience, and risk appetite. You should ONLY risk capital you are prepared and can afford to lose. It is imperative you should seek advice from an independent financial advisor if you have any doubts. Main news source – Bloomberg, and ING, although every effort has been taken to ensure that all content included is correct, we cannot guarantee its accuracy.
All your global news in one place – financial, commodity & crypto
CONTENTS
- Global news headlines
- My views by Chris Tubby
- Global news
- Commodity news
- Crypto news
- Symax Fintech services
- Disclaimer
Global News
Headlines
- ECB speakers suggest more data may be needed before the central bank pauses its hikes.
- Taylor Swift, Beyoncé and “Barbenheimer” are giving a boost to the US economy.
- China bans imports of Japanese seafood.
- Covid estimated to have killed almost 2 million Chinese in two months.
- Traders comb through remarksfrom a slew of Federal Reserve officials and await Jerome Powell’s speech for clues on the interest-rate outlook.
- US budget deficits are exploding like never before
- France extends coal plant waiver into 2024 to back power supply.
- Bond traders are obsessing over this gauge before Jackson Hole.
- Nvidia sets the stage for Arm IPO to ride AI wave.
- Tesla investors to get about $12,000 apiece in Musk’s SEC deal.
- Rolex to buy Bucherer in major retail move for Swiss giant.
- ECB’s Nagel says ‘much too early’ to consider rate hike pause.
- Zillow offers 1% down payment to lure struggling homebuyers.
- Lyme disease has exploded, but a new vaccine is almost here.
- Dropbox ends unlimited cloud storage thanks to a few prolific customers.
- Many grads are questioning if their pricey education was worth it.
- Texas is warning of possible blackouts as a heat wave bears down on the central US.
- JPMorgan wins ruling on loans.
- Mastercard, Visa Distance Themselves From Binance Card Partnerships
- President Xi Jinping called on the BRICS bloc of emerging markets to fast-track a plan to expand its members.
- Argentina’s economic activity contracted for the fourth straight month.
- Saudi Arabia, Iran among nations invited to join BRICS
My View
The expansion of BRICS, which will include some of the States top Middle Eastern allies, Saudi Arabia, UAE and Egypt could complicate geopolitics. Other countries invited to join the bloc are Iran, Argentina and Ethiopia. The expansion of the bloc will create closer ties for these countries with China and Russia and decrease demand for dollars as the bloc will trade in local currency wherever possible, and may eventually lead to a BRICS currency, likely to be both fiat and digital.
Powell is scheduled to deliver his speech today at 10:05 am, Washington time and the markets will be keen to see if there are any hints on how close interest rates are to their peak. Of course, he is likely to say that is data dependent, however, recent data is working in the Feds favour and that expected soft landing is still looking possible. The dollar has been gaining strength, stocks fell after the initial rally from NVIDIA results and oil hovers near $80.
For the ECB and BoE the outlook is not so rosy and although they remain committed to drive inflation lower to the target 2% level, their economies may enter recession as rate rises and higher prices have a deeper impact on their economies. As I have mentioned before, rate increases are lagging and take time to impact the economy, indeed, it can take up to a year, so past rate increases are still to be felt in the economy. This delay could mean that where rates are now will be enough to curb inflation, however, it seems governments and central banks are in a hurry to see inflation drop now and not prepared to wait. With China also struggling to boost their economy, global demand will continue to drop, and this is why by the middle of next year I expect Europe to be in recession. Remember, just my view!
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Global News
Two Federal Reserve officials signaled policymakers may be close to being done with interest-rate increases, but one of them held back from ruling out further hikes. “We may need additional increments, and we may be very near a place where we can hold for a substantial amount of time,” Boston Fed President Susan Collins said Thursday ahead of the Kansas City Fed’s annual economic policy symposium in Jackson Hole. Separately on Thursday, Philadelphia Fed President Patrick Harker said the Fed should keep interest rates at their current level while it assesses the impact on the economy. Pricing in futures markets reflects an expectation that policymakers will hold rates steady when they gather on Sept. 19-20, and they see about a one-in-three chance for a quarter-point hike in November.BB
The ECB’s Joachim Nagel isn’t convinced inflation is under control enough for a halt in interest rate hikes. Any decision will hinge on additional data in the coming weeks, he said, with fellow Governing Council member Boris Vujcic echoing his sentiment. All eyes will be on Jerome Powell’s keynote speech later today for clues on the Fed’s next moves.BB
UK consumer confidence rebounded in August as inflation showed signs of cooling and strong wage growth buoyed household finances. The market research company GfK said its reading of sentiment rose 5 points to minus 25 this month, recouping almost all of the downturn in July. Consumers’ outlook for their own finances in the next year is now 28 points higher than a year ago. The improvement may reflect a decline in the inflation rate, which has ratcheted back expectations for how long the Bank of England will keep raising interest rates. BB
BRICS is little more than a meaningless acronym, Pankaj Mishra writes. The group is seeking to counter US influence but for the most part it practices cynical expediency. The “vision” the BRICS members have in common involves increasing their bargaining power in the trade, technology and military deals that they will continue to vigorously pursue with the US and Europe. BB
As the US Treasury borrows heavily in the bills market, the Fed may find it has to pause efforts to shrink its balance sheet to ensure the banking system remains stable, according to the St. Louis Fed. The Treasury has sold about $1 trillion of bills since June after the government suspended the debt ceiling. The cash to buy this government debt can come from at least two places instead: bank accounts or money market funds. Recently though, money market funds have been holding back. BB
The second estimate of second-quarter GDP growth confirms the stagnation of Germany, Europe’s largest economy and will do very little to end the ‘sick man of Europe’ debate.
Finally, a quarter without any statistical revision. The just-released second estimate of German GDP growth in the second quarter confirmed the economy’s stagnation. The second estimate doesn’t show the German economy in a better state and does little to shut down the current debate about Germany once again being the “sick man of Europe”.
According to the just-released data, the German economy stagnated in the second quarter, after two quarters of contraction. On the year, GDP growth was down by 0.6% or 0.2% if corrected for working days. The question remains whether technically speaking a stagnation after two quarters of contraction is actually the end of a technical recession or a prolongation.
What is new in today’s data are the GDP components. While private consumption stagnated and public consumption increased marginally (+0.1% quarter-on-quarter), net exports were a drag on growth. The positive growth contribution from inventories reflects the ongoing inventory build-up, which doesn’t bode well for the coming quarters.
Both the short-term and the longer-term outlook for Germany looks anything but rosy. Recently released sentiment indicators do not bode well for economic activity in the coming months. Weak purchasing power, thinned-out industrial order books, the ongoing weakness of the Chinese economy as well as the impact of the most aggressive monetary policy tightening in decades, and the expected slowdown of the US economy, all argue in favour of weak economic activity. ING
Goldman slashed its targets for the MSCI Asia Pacific ex Japan Index, warning that China’s property market stress would spill over. It also cut its regional growth forecasts. And Morgan Stanley lowered its predictions for China and Hong Kong equities for a second time in three months. BB
Taylor Swift, Beyoncé and “Barbenheimer” fever are set to give the US economy an $8.5 billion boost this quarter. Almost 50 scheduled concerts may add $5.4 billion to GDP, while the films are expected to contribute about $3.1 billion in consumer spending and exports from international ticket sales. That’ll raise annualized GDP by 0.5 percentage points. BB
China slapped a ban on all imports of Japanese seafood after Tokyo Electric officials began to discharge treated wastewater from the wrecked Fukushima nuclear site into the Pacific Ocean. China blasted the discharge process — which could last about 30 years in total — as “wrongdoing,” while Japan called on Beijing to lift the import ban immediately. China is the largest single export market for Japanese fish, crustaceans and aquatic invertebrates, with Japanese companies shipping almost 72 billion yen ($496 million) worth to China last year. Hong Kong, another major importer, has also imposed curbs on Japanese food imports. Here’s how the wastewater release works. BB
China’s sudden decision to end its strict Covid Zero policy in December 2022 led to nearly 1.9 million excess deaths in just two months, according to one of the first independent studies to estimate the scale of the virus’s devastation on the country. The Chinese government previously disclosed about 60,000 Covid-related deaths in health facilities from early December to the middle of January. In the US, which reported the highest number of Covid deaths during the pandemic, a cumulative 1.1 million adults aged 45 and older have died from the virus to date, according to the US Centers for Disease Control and Prevention. BB
Social media sites will all need to adhere to stricter rules from the EU come Friday, as the bloc looks to tighten regulation on advertising and moderation. Google, Facebook, and X, formerly known as Twitter, all could face fines as high as 6% of a company’s annual revenue, or even a ban from operating in the bloc, for not complying. BB
Commodities
India’s sluggish oil consumption weighs on global prices – India’s petroleum consumption increased to a record high in the first seven months of 2023 but growth has slowed markedly as the rebound from the coronavirus pandemic and lockdowns is completed. The economy is being hit by the same combination of rapid inflation and slowing global trade that has hit other major economies across South and East Asia.
Oil companies sue U.S. over Gulf auction changes meant to protect whale – An oil and gas industry trade group, the state of Louisiana and Chevron on Thursday sued the Biden administration over its decision to withdraw acreage from an upcoming oil and gas lease sale in the Gulf of Mexico to protect an endangered whale. The suit is the latest dispute between the oil and gas industry and the administration of President Joe Biden over leasing federal lands and waters for energy development.
India will decide on sugar exports after assessing cane availability- India will decide on sugar exports for the 2023/24 season once firm estimates of total sugar cane production become available, the government said on Thursday. “Government’s priority is to ensure sufficient availability of sugar for consumption, ethanol production and maintaining closing stocks of 6 million tonnes for 2023/24 season,” the Department of Food and Public Distribution said in a statement.
China says GMO soy, corn trials show ‘outstanding’ results – China’s farm ministry on Thursday said large trials of genetically modified corn and soybeans showed “outstanding” results and that the technology was safe and essential. China has not yet approved commercial planting of GMO corn and soybeans, but has been studying the crops for years, and this year significantly expanded the acreage of its pilot programme.
New Singapore commodity exchange aims to launch EV nickel contract this year – A new Singapore-based commodities exchange aims to launch the world’s first futures contract for a type of nickel used in the booming electric vehicles (EV) sector by the end of this year, an executive said on Thursday. The Abaxx Commodities Exchange, which is getting its final regulatory approvals in Singapore, plans to launch nickel sulphate futures, the first such contract globally, Dan McElduff, president of strategy and development, told Reuters
LME warehousers bet the great metals destock is over – It’s been a tough couple of years to be in the metals storage business with dwindling inventories taking a heavy toll on the London Metal Exchange’s (LME) global warehouse network. Exchange storage capacity contracted by almost a quarter between March 2021 and March 2023, while the number of registered warehouse units has fallen from over 600 to a current 453.
Australia union threatens strikes at Chevron LNG facilities – Unions at Chevron’s liquefied natural gas (LNG) facilities in Australia warned on Friday that work stoppages could cost the U.S. energy major billions of dollars if demands over wages and conditions were not met. The warning came even as workers at a nearby Woodside facility voted to approve a deal struck by the same unions.
Total spending on fuel subsidies topped $7 trillion in 2022, IMF says – Global subsidies for fossil fuels rose by $2 trillion over the past two years to reach a record $7 trillion in 2022, according to new estimates from the International Monetary Fund. The soaring costs, driven by post-pandemic consumption growth and by rising energy costs stemming from Russia’s 2022 invasion of Ukraine, are straining budgets, adding to pollution and exacerbating global warming, the IMF said in a report.
Brazil clears bottlenecks to oust US as top corn exporter – Brazil is set to overtake the U.S. this year as the world’s top corn exporter, reflecting both a bumper harvest and logistical breakthroughs such as the consolidation of northern export routes, which are boosting the competitiveness of the South American grains powerhouse. Corn exports through Brazil’s northern ports, which use the waterways of the Amazon River basin to ship grains globally, are on track to beat volumes via the most traditional port of Santos for a third consecutive year, according to a Reuters analysis of grain shipping data.
Hungary wants EU to extend Ukrainian grains import ban beyond Sept 15 – Hungary wants the EU’s ban on domestic sales of Ukrainian grain to be extended in the five EU member states bordering Ukraine after the current measure ends on Sept. 15, Prime Minister Viktor Orban’s chief of staff told a briefing on Thursday. “Hungary will ask the EU to extend the ban from September 16,” Gergely Gulyas said, adding Hungary was ready to reimpose a national import ban if the EU does not extend the measure
Crypto/Digital
A new controversy has hit crypto, and specifically the world for decentralized finance.
At the heart of it: If you provide software people are using for illicit activity, does that make you a criminal yourself?
If you take the side of the US Justice Department, the answer is yes. If you take the side of the Tornado Cash developers accused this week of engaging in criminal activity, the answer is more complicated.
First, some background. Tornado Cash mixes people’s tokens across various pools to make them harder to track, making it popular with privacy enthusiasts. That utility also makes the platform a haven for money laundering, with blockchain analysis showing some $7 billion in cryptocurrencies has flowed through the service since its creation in 2019.
The US Treasury Department cracked down on Tornado Cash last year as a result, slapping sanctions on the platform. The challenge sparked ire across the blockchain industry in what CEOs and traders alike viewed as a fundamental misunderstanding of the “permissionless” nature of crypto — designed to be governed by computer code without the involvement of human intermediaries. Digital-asset exchange Coinbase Global Inc. and advocacy group Coin Center were among those to sue the US Treasury Department over the matter, a case that turned sour last week when the group lost a bid for a summary judgment.
On Wednesday, the stakes got even higher. New charges saw US authorities argue that Tornado’s three co-founders — Roman Semenov, Roman Storm and Alexey Pertsev — held an alleged controlling interest in the service, dictating new product lines, designing key bits of code and profiting from Tornado’s activities when the value of its native token, called TORN, increased.
The evidence detailed in the indictment is considerable, and alleges the co-founders still had significant influence over Tornado’s operations even after they had handed over control of the platform to a decentralized autonomous organization, or DAO.
Decentralization and the ability to build software in a way that ensures no one person or entity holds sway goes to the very heart of what crypto stands for. Much of the innovation that occurs within the sector stems from DAOs, with the side-effect of that structure — intended or otherwise — being that it’s theoretically harder to pin down who’s responsible.
Despite last week’s loss, Coin Center and others have already loudly criticized the new charges, with the main argument being that the co-founders were actually just developing software, rather than running an unregistered money transmitting business. If that were found to be true, they say Tornado Cash would instead be exempt from oversight under guidance from FinCEN, the Treasury’s financial crimes division.
But that’s a much harder case to make when considering how the platform was also being used to create profits for Tornado and its founders, according to Preston Byrne, a partner at Brown Rudnick LLP. “At the end of the day there’s a big difference between slinging code and posting it on GitHub, and operating an unlicensed money services business which monetizes that code as a going concern,” he said in a message.
To some in crypto, knowing your software is facilitating transactions for sanctioned actors like North Korean hackers and doing nothing to halt that access is par for the course when operations are managed in a way that humans can’t intervene. What’s debatable is to profit from that access, and later make changes to the service with a view to increasing that profit after the hackers start using it in earnest.
Most DeFi platforms require a native token in order to function — and it’d be hard to argue that industry founders haven’t been enriched by their token’s growth in one form or another. As a result, the consequences of the sanctions against Tornado Cash and any guilty verdict against its founders could set a chilling precedent for DeFi.
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DISCLAIMER
Trading involves the risk of loss of capital and is not suitable for everyone. As many companies provide high leverage you should be aware you could lose substantially more than your initial investment. The content of this daily newsletter should only be considered a guide and views, opinions or content contained in this email is provided solely for information purposes and does not constitute investment advice or a solicitation to trade or invest. Previous performance is no guarantee of future performance. You should carefully consider the inherent risks, your financial situation, your investment objectives, level of experience, and risk appetite. You should ONLY risk capital you are prepared and can afford to lose. It is imperative you should seek advice from an independent financial advisor if you have any doubts. Main news source – Bloomberg, and ING, although every effort has been taken to ensure that all content included is correct, we cannot guarantee its accuracy.