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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.

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.
Amid rising regional tensions, the US announced that it will hold another Rim of the Pacific military exercise
The U.S. Navy's Pacific Fleet announced on Wednesday (May 22) that the 2024 Rim of the Pacific Exercise (RIMPAC 2024) is expected to take place on June 26, with 29 countries participating in and around the Hawaiian Islands, a larger lineup than the previous exercise in 2022. The Philippines, which has had multiple maritime conflicts with China recently, and Japan, which has tense diplomatic relations with China, will send troops to participate. China has been excluded from participating in the international military exercise since 2018, and its aggressive actions and reactions are causing tensions in the Pacific region to continue to rise. The biennial Rim of the Pacific military exercise is the world's largest international maritime exercise. The U.S. Navy said that the exercise will last until August 2, and it is expected to involve 29 countries, 40 surface ships, 3 submarines, 14 countries' army forces, more than 150 aircraft and more than 25,000 personnel. The U.S. Navy said that the theme of the 29th RIMPAC 2024 is "Partners: Integrated and Ready", emphasizing inclusiveness as the core, promoting multinational cooperation and trust, and using military interoperability to achieve their respective national goals to strengthen integrated and ready alliance partners. Its goal is to "enhance collective strength and promote a free and open Indo-Pacific region" through joint training and operations. The 29 countries participating in the exercise this year include Australia, Belgium, Brazil, Brunei, Canada, Chile, Colombia, Denmark, Ecuador, France, Germany, India, Indonesia, Israel, Italy, Japan, Malaysia, Mexico, the Netherlands, New Zealand, Peru, South Korea, the Philippines, Singapore, Sri Lanka, Thailand, Tonga, the United Kingdom and the United States. Compared with the 28th RIMPAC held in 2022, which involved 26 countries, 38 surface ships, 4 submarines, 9 countries' army forces, more than 170 aircraft, and about 25,000 officers and soldiers, the number of countries, ships and army forces participating in this exercise has increased. The countries participating in this year's RIMPAC military exercise include all members of the Quadrilateral Security Dialogue (QUAD) between the United States, Japan, India and Australia, and the Australia-UK-US Trilateral Security Partnership (AUKUS), as in the previous exercise. In addition, countries surrounding the South China Sea and the South Pacific island nation of Tonga are also participating. Many analysts believe that the military exercise itself is sending a message to China: China's expansion in the Western Pacific region will be blocked and defeated. The United States invited China to participate in the RIMPAC military exercise twice in 2014 and 2016. In 2018, due to China's expansion in the South China Sea, the United States withdrew its invitation to China. In addition, despite Taiwan's repeated willingness to participate, Taiwan is still not included in the 29 countries participating in this year's RIMPAC military exercise. Analysts pointed out that the US-led RIMPAC military exercise is intended to unite allies to militarily intimidate China. If Taiwan is invited to join, it will be too provocative to China, which will not only aggravate the tension between the United States and China, but also embarrass some allies. The U.S. Navy said the commander of the U.S. Third Fleet will serve as the commander of the joint task force for the exercise, while Chilean Navy Commodore Alberto Guerrero will serve as deputy commander of the joint task force, which is a first in the history of the RIMPAC military exercise. In addition, Japan Maritime Self-Defense Force Rear Admiral Kazushi Yokota will also serve as deputy commander. Other key leaders of the multinational force exercise include Canadian Commodore Kristjan Monaghan, who will command the maritime forces, and Australian Air Force Commodore Louise Desjardins, who will command the air forces. According to the U.S. Stars and Stripes, Vice Admiral Michael Boyle is currently the commander of the U.S. Third Fleet. Vice Admiral John Wade has been nominated to replace Boyle. The U.S. Navy press release said the exercise will enhance the ability of international joint forces to "deter and defeat aggression by major powers in all domains and conflict levels," but did not provide specific information on which exercises will be held this summer. Previous RIMPAC training exercises have included sinking ships at sea with missiles, amphibious landings and the first landing of a Marine Corps Osprey aircraft on an Australian ship.
Xinjiang scientists discover plant with potential to survive on Mars
In a groundbreaking discovery, researchers from the Xinjiang Institute of Ecology and Geography of the Chinese Academy of Sciences have found a desert moss species, known as Syntrichia caninervis, that has the potential to survive in the extreme conditions on Mars. The Global Times learned from the institute that during the third Xinjiang scientific expedition, the research team focused on studying the desert moss and found that it not only challenges people's understanding of the tolerance of organisms in extreme environments, but also demonstrates the ability to survive and regenerate under simulated Martian conditions. Supported by the Xinjiang scientific expedition project, researchers Li Xiaoshuang, Zhang Daoyuan and Zhang Yuanming from the Xinjiang Institute of Ecology and Geography and Kuang Tingyun, an academician from the Chinese Academy of Sciences, concentrated on studying the "pioneer species" Syntrichia caninervis in an extreme desert environment, according to the institute in an article it sent to the Global Times on Sunday. Through scientific experiments, the researchers systematically proved that the moss can tolerate over 98 percent cell dehydration, survive at temperatures as low as -196 C without dying, withstand over 5000Gy of gamma radiation without perishing, and quickly recover, turn green, and resume growth, showcasing extraordinary resilience. These findings push the boundaries of human knowledge on the tolerance of organisms in extreme environments. Furthermore, the research revealed that under simulated Martian conditions with multiple adversities, Syntrichia caninervis can still survive and regenerate when returned to suitable conditions. This marks the first report of higher plants surviving under simulated Martian conditions. The research team also identified unique characteristics of Syntrichia caninervis. Its overlapping leaves reduce water evaporation, while the white tips of the leaves reflect intense sunlight. Additionally, the innovative "top-down" water absorption mode of the white tips efficiently collects and transports water from the atmosphere. Moreover, the moss can enter a selective metabolic dormancy state in adverse environments and rapidly provide the energy needed for recovery when its surrounding environment improves. Based on the extreme environmental tolerance of Syntrichia caninervis, the research team plans to conduct experiments on spacecraft to monitor the survival response and adaptation capabilities of the species under microgravity and various ionizing radiation adversities. They aim to unravel the physiological and molecular basis of the moss and explore the key life tolerance regulatory mechanisms, laying the foundation for future applications of Syntrichia caninervis in outer space colonization.
Portadown businessman avoids jail for sexual assault of teen under his employment Defence said the defendant 'continues to deny' the charges and bail in the sum of £1,000 was fixed for appeal
A Portadown man has avoided jail after sexually assaulting a 16-year-old shop worker under his employment. -ADVERTISEMENT- Brian Thomas Chapman (58), of Moyallan Road, appeared before Newry Magistrates’ Court on Monday for sentencing on two counts of sexual assault. The prosecution outlined that on September 23, 2020, a 16-year-old student in the employment of Brian Chapman, disclosed to her mother about incidents that had occurred in her workplace. She said Chapman had put his hand on her thigh and the back of her leg. She also disclosed that she had been getting extra money from him and he had been sending her text messages. The allegations were reported to police the next day, September 24. The victim then took part in an interview on October 9, in which she said, when she was alone in Chapman’s office, he placed his hand on her upper thigh and his other hand on her lower back, underneath her trousers. The defendant was arrested and interviewed at Lurgan police station, where he denied the allegations. His phone was seized and an examination was carried out. The first interview of the defendant took place on October 9, during which he admitted to sending a message about wanting the victim to work 24/7, but stated this was a joke. The second interview took place on January 28, 2021, where he admitted to sending the 24/7 message, but denied sending other messages, such as “hope you’re spending the pounds on something special”. Throughout this process, Chapman denied sending the messages and denied any of the sexual assaults alleged by the victim. On the Chapman’s criminal record, the prosecution added that he was convicted of three common assaults on appeal. In terms of commission, these matters pre-dated this case but the conviction occurred during the running of this case and also involved a female working for the defendant. Prosecution continued that the age of the victim was an aggravating feature, arguing there was a “vulnerability” due to the “power-imbalance” between Chapman and the young student working for him. An additional aggravating feature, they said, was that during the course of the defence, part of the defence was that the victim had “manipulated or manufactured” some of the text messages that were sent. A defence lawyer, speaking on the pre-sentence report, noted the author deemed Chapman to be of low risk. He also noted that similar offences were contested in the County Court in respect of another complaint, with the judge substituting indecent assault charges for common assault. He also argued a Sexual Offences Prevention Order (SOPO) was not necessary as the offending was four years ago, there has been no repetition and risk had been addressed. District Judge Eamonn King noted the defendant was convicted on two of four original charges following a contest, which ran over a number of days, with the case adjourned for a pre-sentence report and victim impact statement to be produced. He added the defendant “continues to deny” the charges and seeks to appeal the outcome. District Judge King, on reading the pre-sentence report, noted the defendant “denies ever hugging or touching the individual and he denies any sexual attraction to the victim”, but pointed to a paragraph in the report which stated, “From the available evidence, it’s possible to surmise that he demonstrated risk taking and impulsive behaviour. It appears that he took advantage of his position and power in a bid to meet his sexual needs, given the victim’s young age and the fact that he was her employer”. The report added that this demonstrated “limited victim empathy and responsibility due to his denial of the offences”. On the victim impact statement, District Judge King described her as a young girl getting her first job, with the “world as her oyster”. He continued: “As a result of what she says occurred, that turned on its head. It left her feeling inwardly uncomfortable, anxious and lonely. She cut herself off from her friends. She stopped going out. She didn’t want to go to school.” He also described a “degree of manipulation” in the case, as this was the victim’s first job and there was a power imbalance between her as an employee, and Chapman as the employer. In his sentencing remarks, District Judge King, said: “I’ve taken time to emphasise to the victim in this case that the victim did nothing wrong. The victim did everything right and the victim shouldn’t feel lonely, anxious or isolated. “The victim should feel confident, strong and outgoing.” Owing to the defendant’s ongoing denial of the charges, he added: “My sentencing exercise isn’t the conclusion of the case today, but I will sentence, so that we can move towards the conclusion going forward. “I am satisfied, irrespective of what the pre-sentence report says, that the defendant took advantage of someone, attempted to groom someone and was guilty of the two offences.” On the two counts, Chapman was sentenced to three months in prison, suspended for two years. He was also made subject to a Sexual Offences Prevention Order (SOPO) for five years and placed on the sex offenders’ register for seven years. Following sentencing, District Judge King fixed bail for appeal at £1,000.
Could a $600 billion funding gap crush the AI industry?
On July 5, Microsoft co-founder Bill Gates appeared on the Next Big Idea podcast to discuss his vision for Superhuman artificial intelligence and technological progress. At the same time, it said that the enthusiasm of the AI market is far more than the Internet bubble. Gates believes that the current threshold for entry in the AI field is very low, and the entire market is in a fever period, AI startups can easily get hundreds of millions of dollars in financing, and even have raised $6 billion (about 43.734 billion yuan) in cash for a company. "Never before has so much capital poured into a new area, and the entire AI market has fallen into a 'frenzy' in terms of market capitalization and valuation, which dwarfs the frenzy of the Internet and automotive periods in history." Gates said. At this stage, the rapid development of the artificial intelligence industry is a veritable gold industry, and Nvidia's market value is therefore soaring, and the total market value reached 3.34 trillion US dollars on June 18 local time, surpassing Microsoft and Apple in one fell fell, becoming the world's most valuable listed enterprise. But in fact, doubts about the field of artificial intelligence have also risen one after another and have never stopped.