What Would it Take for a BRIC-Based Currency to Succeed?

@Gary_Brode @tyillc @dlacalle_IA @RobMcNealy

To answer the question, we must first define "success". I have two measures, the first is use as a reserve currency the second is sanction avoidance.

mishtalk.com/economics/what…

What Would it Take for the “Brick” to Succeed as a reserve currency?

1: The Brick would need to float freely. The yuan doesn’t.
2: A functioning Brick-based bond market.
3: A significant desire by individuals to trade in Bricks and accept Bricks rather than local currencies or the dollar.
4: Willingness of China to stop export mercantilism.
5: Trust

China Abandons Clean Energy Goals Making U.S. Efforts Painful and Pointless

@EnergyPhilFlynn @Gary_Brode @dlacalle_IA @RobMcNealy

Bidenomics and the EPA have America on a path of inflationary and environmental madness that’s all pain and no gain.

https://t.co/yC3QYGvYY4mishtalk.com/economics/chin…
Heritage Foundation Three Key Points

1: China has repeatedly stated that it has no intention of going along with the Western push to net-zero.

2: EVs are not emissions-free, because they need electricity to charge them, and electricity generation creates emissions. twitter.com/i/web/status/1…

America’s Fiscal Time Bomb and the Fitch Downgrade of US Debt in Pictures

@tyillc @Gary_Brode @EnergyPhilFlynn

“Everybody who reads the newspaper knows that the US has a very serious long-term fiscal problem,” said Fitch in its downgrade of US debt.

https://t.co/9gJPhYfwOfmishtalk.com/economics/amer…
Expenditures are $6.443 trillion while receipts total only $4.779 trillion. That’s a gap of $1.664 trillion.

The 1,921 Room Hilton Union Square Hotel in San Francisco Was Just Abandoned

@Gary_Brode @menlobear @tyillc

One of the largest hotels in US was forfeited by owner to the lender.

mishtalk.com/economics/the-… Park Hotels & Resorts is also giving up on the 1,024-room Parc 55, citing the continued debt burden of the two hotels on its portfolio, and multiple factors that have made the SF market less desirable for their business.

The SEC Seeks to Freeze Binance Assets, Bitcoin Dives Six Percent

@Gary_Brode @menlobear @binance @cz_binance
h/t @Bitfinexed
#bitcoin

SEC Says Binance Misused Customer Funds, Ran Illegal Crypto Exchange in U.S. The SEC seeks to shut down Binance.

mishtalk.com/economics/the-… Mish Three-Point Synopsis

1: The SEC says Binance is an illegal, unregistered entity that repeatedly broke federal securities laws and commingled client funds into accounts and corporate relationships controlled by Zhao, Binance’s Chief Executive Officer. twitter.com/i/web/status/1…

ISM Services Drops to a Barely Above Contraction Level of 50.3%

@menlobear @Gary_Brode @tyillc

kiss goodbye the idea that services will keep the US economy humming.

mishtalk.com/economics/ism-… Services: “The past relationship between the Services PMI® and the overall economy indicates that the Services PMI® for May (50.3 percent) corresponds to a 0.2-percent increase in real gross domestic product (GDP) on an annualized basis.” twitter.com/i/web/status/1…

Home Prices Drop the Most in Eleven Years, New Listings Plunge

@tyillc @TheBubbleBubble @menlobear

Home prices are down 4.1 percent from a year ago. But that's not even a drop towards improved affordability.

mishtalk.com/economics/home… National Trends

Median Price: The median U.S. home sale price fell 4.1% ($17,603) year over year in April to $408,031. That’s the biggest drop on record in dollar terms and the largest decline since January 2012 in percentage terms.

Contrary to Popular Myth, Brexit Was Not a Bad Decision and Did Not Fail

@dlacalle_IA @Nigel_Farage @menlobear

The Atlantic says "Britain is now paying the price for its decision to leave the European Union." I take the other side.

mishtalk.com/economics/cont… Consider UK policy after Brexit: No tax cuts, no trade deal with the US or China, No dismantling of inept EU rules and regulations, no progress on things like artificial intelligence or energy.

The Market Now Believes in a Much Tougher Fed Until November

@menlobear @tyillc @Gary_Brode

The market has penciled in a possible hike in July, otherwise, little action until November. This is a much tougher forecast than the rate cut view on May 3.

mishtalk.com/economics/the-… According to CME Fedwatch, the single most likely action by the Fed is a pause all the way until a rate cut at the November meeting. But the path isn't necessarily a flat one.

Biden Accuses Republicans of Extreme and Unacceptable Positions as Budget Optimism Fades

h/t @Johncomiskey77 @Stimpyz1 @DiMartinoBooth

Optimism fades regarding a deal to avoid a default on U.S. sovereign debt.

mishtalk.com/economics/bide… Moody's Predictions

Moody’s Analytics predicts that a default would cost more than seven million jobs and cause the unemployment rate to move above over 8%.

The ratings company also predicts that the stock market would lose a fifth of its value. twitter.com/i/web/status/1…

30-Year Mortgage Rates Approaching 7 Percent Again, Housing Will Suffer

@menlobear @tyillc @TheBubbleBubble
The 30-year mortgage rate is 6.90 percent. For now, expect continued housing weakness.

mishtalk.com/economics/30-y… Technical Pattern

The blue triangle-shaped pattern I outlined on the MND chart is either a symmetric continuation pattern (same slope) or a rising wedge, differing slopes.

If your crayon is fat enough, you can shift the blue lines to make a case either way. twitter.com/i/web/status/1…

Retail Sales Rise in April but Price Inflation Accounts for All of the Increase

@menlobear @Gary_Brode @TheBubbleBubble

Nominal retail sales rose 0.4% in April. But consumers had to spend extra money to get the same amount of goods as in March.

mishtalk.com/economics/reta… Retail and food services sales for April 2023, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $686.1 billion, up 0.4 percent from the previous month, and up 1.6 percent above April 2022. twitter.com/i/web/status/1…

Hoot of the Day: The UAW Demands a "Just Transition" to Electric Vehicles

@EnergyPhilFlynn @tyillc @Gary_Brode
The big US automakers cannot turn a profit on EVs anytime soon. So guess what.

mishtalk.com/economics/hoot… Tesla is in front partially because it was first. But it's also in a great position because of cheap money by the Fed, subsidies on which only it gained, and energy tax credits.

Understanding House Speaker McCarthy's "Limit Save Grow Act" on Free Government Aid

@TraceyRyniec
The number of people collecting disability is soaring rapidly. McCarthy wants to do something about that. Liberals object.

mishtalk.com/economics/unde… McCarthy's proposal would require able-bodied adults without children to work, train or volunteer at least part time as a condition of receiving taxpayer support.

President Biden and the Need to Do Something, Just Not Now

Last week, President Biden reiterated his willingness to negotiate over the budget but not the debt ceiling.

It's a lie.

mishtalk.com/economics/pres… Biden says there is nothing to negotiate now, only later.

Dollar Weaponization Expands - FDIC Message to Foreign Depositors Is Don't Trust the US

@LynAldenContact @dlacalle_IA @menlobear

h/t @FedGuy12 @michaelxpettis
The weaponization of the US dollar by US agencies continues with a ruling by the FDIC.

mishtalk.com/economics/doll… In March, the FDIC seized nearly $14 billion in foreign deposits at Silicon Valley Bank, most of of the deposits were from Asia.

Foreign depositors have been waiting access to their money. The FDIC now affirms, sorry, too bad.

Poof.

Unexpected Weakness in ISM Services, Backlog and New Orders Plunge

@menlobear @tyillc @michaellebowitz

It's time to kiss goodbye the idea that services will keep the US economy humming.

mishtalk.com/economics/unex… Mish Notables

New orders didn't just "cool", they plunged 10.4 points.
New export orders plunged 18 points into deep contraction at 43.7.
The backlog of orders contracted for the first month, at 48.5.

Don't Worry, the Fed Seeks to "Minimize the Pain of the Journey"

@menlobear @tyillc
h/t @FreightAlley

By monitoring inflation expectations, the Fed promises to minimize your pain.

mishtalk.com/economics/dont… "I plan to remain diligent in setting monetary policy to return the economy to price stability in a timely way and to be judicious in balancing the risks so as to minimize the pain of the journey."

CoreLogic Predicts Home Prices Will Rise 3.7 Percent This Year

@tyillc @menlobear

Is the CoreLogic forecast silly or spot on likely? Let's discuss.

mishtalk.com/economics/core… "The CoreLogic forecast accuracy represents a 95% statistical confidence interval with a +/- 2% margin of error for the index."

I'll take the under
way, way, under

Factory Orders Unexpectedly Much Weaker Than Expected With Big Negative Revisions

@tyillc @menlobear
The negative revisions keep piling up. Expect more of them as the economy weakens.

mishtalk.com/economics/fact… Key Items

New Orders: -0.7%, January revised from -1.6% to -2.1%
Durable Goods: -1.0%
Motor Vehicles and Parts: -0.8%
Nondurable Goods: -0.4%
Excluding Defense: -0.5%
Excluding Transportation: -0.3%
Transportation: -2.8%

Baseline GDPNow Forecast Drops 50 Percent Since March 23, But Final Sales Still Strong

@tyillc @menlobear

The ISM and construction reports sent the GDPNow forecast on a deep dive. What's Going on?

mishtalk.com/economics/base… Since March 23, the baseline GDPNow forecast has fallen over 50 percent from 3.5% to 1.7 %

However, the number to watch is Real Final Sales (RFS).

The difference between RFS and the baseline forecast is Change in Private Inventories (CIPI) that nets to zero over time.