Morning Bid: Eyes switch to inflation vs elections, Powell up
A look at the day ahead in U.S. and global markets from Mike Dolan
After an intense month focused on election risk around the world, markets quickly switched back to the more prosaic matter of the cost of money - and whether disinflation is resuming to the extent it allows borrowing costs to finally fall.
Thursday's U.S. consumer price update for June is the key moment of the week for many investors - with the headline rate expected to have fallen two tenths of a percentage point to 3.1% but with 'core' rates still stuck at 3.4%.
With Federal Reserve chair Jerome Powell starting his two-pronged semi-annual congressional testimony later on Tuesday, the consensus CPI forecast probably reflects what the central bank thinks of the situation right now - encouraging but not there yet.
But as the U.S. unemployment rate is now back above 4.0% for the first time since late 2021, markets may look for a more nuanced approach from the Fed chair that sees it increasingly wary of a sudden weakening of the labor market as real time quarterly GDP estimates ebb again to about 1.5%.
There were some other reasons for Fed optimism in the lead up to the testimony.
The path U.S. inflation is expected to follow over coming years generally softened in June, amid retreating projections of price increases for a wide array of consumer goods and services, a New York Fed survey showed on Monday.
Inflation a year from now was seen at 3% as of June - down from the expected rise of 3.2% in May - and five-year expectations fell to 2.8% from 3%.
Crude oil prices are better behaved this week, too, falling more than 3% from the 10-week highs hit late last week and halving the annual oil price gain to 10%.
The losses on Tuesday came after a hurricane that hit a key U.S. oil-producing hub in Texas caused less damage than many in markets had expected - easing concerns over supply disruption.
Before Powell starts speaking later, there will also be an update on U.S. small business confidence for last month.
When Amazon also started upgrading "refund only"
Amazon official said that the freight from the Chinese warehouse will be lower than the traditional FBA(Fulfillment by Amazon) fee, similar to the domestic air delivery small package service, which will undoubtedly greatly reduce the logistics costs of sellers. In addition to logistics, Amazon is also responsible for promotion and traffic, of course, sellers can still independently carry out product advertising, pricing and promotion activities, to maintain the personalized and independent brand. Many industry insiders said that Amazon launched the "low-price store" move to fight China's cross-border e-commerce platforms Temu, Shein, AliExpress and so on. Although it provides another platform for China's e-commerce to go to sea, many sellers said that the cost of settling in Amazon cross-border e-commerce has become lower, and they have asked about the conditions of settling in, but the rules look down, in fact, it is not so friendly for sellers.
Porsche AG reports sharp fall in China deliveries
July 9 (Reuters) - German sportscar maker Porsche (P911_p.DE), opens new tab said on Tuesday that global vehicle deliveries were down 7% in the first half of the year compared to the same period in 2023, primarily driven by a 33% year-on-year drop in China. Porsche, majority-owned by Volkswagen (VOWG_p.DE), opens new tab, is highly exposed to the EU-China tariff tensions, with deliveries to China accounting for nearly 20% of global deliveries. An HSBC analyst pointed to weakness in the European car market, saying that "the market is, understandably, worried about China pricing weakness and the prospect of needing to pay dealer compensation." Overall, Porsche delivered 155,945 cars worldwide during the first six months of the year. In North America, deliveries were down 6% year-on-year. Meanwhile, in Porsche’s home market of Germany, deliveries increased by 22% to 20,811 vehicles.
US politicians' lurch to levying high tariffs to damage global economic sustainability
US politicians are advocating for steep tariffs, echoing the protectionist Fordney-McCumber Tariff of 1922. Despite potential international retaliation, risks to global economic rules and a shift from post-World War II principles, US politicians have promised to increase trade barriers against China, causing concerns for the sustainability of global economic harmony. A century ago, the Republican Congress passed the Fordney-McCumber Tariff of 1922. This post-World War-I effort to protect the US from German competition and rescue America's own businesses from falling prices sparked a global wave of tariff hikes. While long forgotten, echoes of Fordney-McCumber now reverberate across the US political landscape. Once again, politicians are grasping the tariff as a magic talisman against its own economic ills and to contain the rise of China. The Democratic Party of the 1920s opposed tariffs, because duties are harmful to consumers and farmers, but today both President Joe Biden and former President Donald Trump favor national delivery through protectionism. Trump promised that his second term, if elected, would impose 60-percent tariffs on everything arriving from China and 10-percent tariffs on imports from the rest of the world, apparently including the imports covered by 14 free trade agreements with America's 20 partners. He initially promised 100-percent tariffs on electric vehicles (EVs), but when Biden declared that he was hiking tariffs on EVs from China to 100-percent, Trump raised the ante to 200-percent. On May 14, 2024, the White House imposed tariffs ranging from 25 percent (on items such as steel, aluminum and lithium batteries) to 50 percent (semiconductors, solar cells, syringes and needles) and 100 percent (electric vehicles) on Chinese imports. US government officials offer "national security" and "supply chain vulnerability" as the justification for levying high tariffs. To deflect worries about inflation, US Trade Representative Katherine Tai declared, "first of all, I think that that link, in terms of tariffs to prices, has been largely debunked." Contrary findings by the United States International Trade Commission and a number of distinguished economists, as well as Biden's own 2019 statement criticizing Trump's tariffs - "Trump doesn't get the basics. He thinks tariffs are being paid by China… [but] the American people are paying his tariffs" - forced Tai's office to wind back her declaration. The fact that prohibitive barriers to imports of solar cells, batteries and EVs will delay the green economy carries zero political weight with Trump and little with Biden. Nor does either of them worry about the prospects of Chinese retaliation and damage to the fabric of global economic rules. Historical lessons - unanticipated consequences of the foolish Fordney-McCumber Tariff of 1922 and the Smoot-Hawley Tariff of 1930 - are seen as irrelevant by the candidates and their advisers. The US' lurch from its post-World War II free trade principles offers China a golden opportunity. On the world stage, China will espouse open free trade and investment. China will encourage EV and battery firms to establish plants in Europe, Brazil, Mexico and elsewhere, essentially daring the US to damage its own alliances by restricting third country imports containing Chinese components. Whether the fabric of global economic rules that has delivered astounding prosperity to the world will survive through the 21st century remains to be seen. Much will depend on the decisions of other large economic powers, not only China but also the European Union and Japan, as well as middle powers, such as Australia, Brazil, Chile, ASEAN and South Korea. Their actions and reactions will reshape the rules of the 21st century. If others follow America down this costly path, the world will become less prosperous and vastly more unpredictable. If they resist, the US risks being diminished and more isolated. The author is a non-resident Senior Fellow at the Peterson Institute of International Economics. bizopinion@globaltimes.com.cn
Argentina's government reform bill officially takes effect: granting the president special powers in areas such as administration
On the 8th, the Argentine government promulgated the "Foundations and Starting Points for Argentine Freedom" comprehensive bill and a package of fiscal measures, marking the official entry into force of the government reform bill. According to the official gazette of the Argentine government, Argentine President Milley, Chief Cabinet Minister Guillermo Francos and Economy Minister Luis Caputo jointly signed Decrees No. 592 and No. 593 to promulgate these two new reform measures. The comprehensive bill declared Argentina to enter a one-year public emergency in the administrative, economic, financial and energy fields, and granted the president special powers in these fields. It also includes the relaxation of economic regulations, labor reforms and the implementation of a large-scale investment incentive system. The package of fiscal measures involves anti-money laundering, tax deferral, tariffs, re-imposition of high-salary income tax and reduction of personal property taxes. On June 28, after six months of negotiations, the two reform bills were finally passed by the Argentine Congress.
Google extends Linux kernel support to 4 years
According to AndroidAuthority, the Linux kernel used by Android devices is mostly derived from Google's Android Universal Kernel (ACK) branch, which is created from the Android mainline kernel branch when new LTS versions are released upstream. For example, when kernel version 6.6 is announced as the latest LTS release, an ACK branch for Android15-6.6 appears shortly after, with the "android15" in the name referring to the Android version of the kernel (in this case, Android 15). Google maintains its own set of LTS kernel branches for three main reasons. First, Google can integrate upstream features that have not yet been released into the ACK branch by backporting or picking, so as to meet the specific needs of Android. Second, Google can include some features that are being developed upstream in the ACK branch ahead of time, making it available for Android devices as early as possible. Finally, Google can add some vendor or original equipment manufacturer (OEM) features for other Android partners to use. Once created, Google continues to update the ACK branch to include not only bug fixes for Android specific code, but also to integrate the LTS merge content of the upstream kernel branch. For example, the Linux kernel vulnerability disclosed in the July 2024 Android security bulletin will be fixed through these updates. However, it is not easy to distinguish a bug fix from other bug fixes, as a patch that fixes a bug may also accidentally plug a security vulnerability that the submitter did not know about or chose not to disclose. Google does its best to recognize this, but it inevitably misses the mark, resulting in bug fixes for the upstream Linux kernel being released months before Android devices. As a result, Google has been urging Android vendors to regularly update the LTS kernel to avoid being caught off guard by unexpectedly disclosed security vulnerabilities. Clearly, the LTS version of the Linux kernel is critical to the security of Android devices, helping Google and vendors deal with known and unknown security vulnerabilities. The longer the support period, the more timely security updates Google and vendors can provide to devices.