Authored by Brian Morgenstern via Bitcoin Magazine,

One in four Americans own Bitcoin.

That’s more Americans than are over the age of 65, but how often do you hear candidates talk about senior concerns compared to concerns of crypto owners?

President Donald Trump has been making a concerted effort in the 2024 campaign trail to appeal to Bitcoiners.

At the recent Libertarian National Convention, President Trump vowed to “stop Joe Biden’s crusade to crush crypto,” and assured Bitcoin holders specifically that he supports the right to self-custody.

“I say this with your vote, I will keep Elizabeth Warren and her goons away from your Bitcoin, and I will never allow the creation of a central bank digital currency,” President Trump said.

It’s clear which candidate this November is the best choice for Bitcoin owners and the entire industry – President Trump. He appears to see the wisdom of the pro-Bitcoin stances taken by popular leaders around the world, such as Presidents Javier Milei of Argentina and Nayib Bukele of El Salvador

Accordingly, he is staking out a clear position.

Trump acknowledges our right to self-sovereignty, and perhaps no one better understands the value of decentralization, as people have been losing trust in institutions like the government and banks.

Trump has been the target of unprecedented lawfare politicizing the justice system, and Trump-affiliated organizations have been debanked and de-platformed.

President Biden, meanwhile, just vetoed legislation that would have ensured a customer’s right to have their preferred regulated financial institution custody their Bitcoin or other digital assets—laughably—in the name of “consumer protection.”

The Biden administration has been extraordinarily hostile to Bitcoin as well as the broader cryptocurrency ecosystem. The administration launched “Operation Choke Point 2.0” whereby regulators effectively instituted new rules via press release instructing banks to stop doing business with companies in the digital asset space. Further, the White House proposed a 30 percent tax on the energy used to mine Bitcoin, which would make it unprofitable and completely uneconomical for the industry to do business in the United States. Their Energy Department also attempted to collect information regarding Bitcoin miners’ energy contracts as a step towards regulating them out of business. The Justice Department even broke with long-standing Treasury Department guidance when it attempted to regulate via court filing to say that self-hosted wallets should be treated as money transmitting businesses. This is all by design. They want to effectively ban the industry.

It all starts to make sense when you consider that the Biden administration has also laid the groundwork for a Central Bank Digital Currency.

Certain politicians support the creation of a CBDC because they desire complete control. They want to be able to track our transactions and tell us how we can and cannot spend our money. Bitcoin represents the polar opposite: freedom from government-driven collectivism and the empowerment of the individual.

To be clear, there are many pro-Bitcoin leaders in the Democratic party, such as Sen. Kirsten Gillibrand and Reps. Ritchie Torres and Wiley Nickel, just to name a few.

Over 70 Democrats in the House of Representatives recently voted for favorable market structure legislation. But there needs to be many more.

President Biden has surrendered governance of his administration on these issues to the self-appointed “anti-crypto” Senator Elizabeth Warren and her acolytes. This has resulted in policies that mirror the Chinese Communist Party’s approach to Bitcoin, and anything of which the ruling party disapproves: cut off financial services, attempt to cut off access to energy in the name of environmentalism, impose impossible market regulations, and essentially do anything they can to handicap the Bitcoin network while they work towards the ultimate tool of control over their populace: a CBDC.

Sen. Warren herself has even proposed legislation that would effectively ban Bitcoin mining in the United States by treating miners the same as financial institutions by requiring anti-money laundering standards despite the fact that miners do not custody any customer assets. As she well knows, if there are no Bitcoin miners, there are no Bitcoin transactions, and the path to a CBDC would be much easier without any private alternatives.

The good news for Bitcoiners this November is that they have a clear alternative. This is critical because a whopping one-third of voters say they are weighing candidates’ views on digital assets for their choice in the election.

The choice is clear.

President Trump will protect your right to own Bitcoin, to mine Bitcoin, to transact with Bitcoin, and for many of us, to work in the Bitcoin industry. We believe he will support Bitcoin miners’ ability to help revolutionize the finance and energy industries in the United States and maintain American economic leadership for the future. And he will ban a CBDC, protect self-custody, and stop out of control regulators from trying to put us out of business.

If you are a Bitcoiner, President Trump is the best candidate this year to, dare I say, Make Bitcoin Great Again in the eyes of the U.S. government.

After stellar 10Y and 30Y auctions last week, moments ago the Treasury sold its sole coupon auction for the week when it placed $13BN in a 20Y paper (technically the 19-Y 11-M reopening of Cusip UB2). The auction was met with no less than record demand, with metrics off the charts in virtually every category.

Starting at the top, the high yield of 4.452% was below last month’s 4.635% and the lowest since January’s 4.423%. This was a whopping 2.8bps stop through to the 4.452% When Issued, which was the biggest stop through since Nov 22 and the third highest on record!

The bid to cover jumped to 2.74 from 2.51, and well above the six-auction average of 2.60 if nowhere close to the highest on record which was 2.87 exactly one year ago.

But if the BTC was so-so, the internals were stellar, with Indirects taking down 77.9%, which was the second highest on record with just the 78.0% in July 2022 higher. And with Directs awarded 16.3%, Dealers were left holding only 5.3% of the final auction, a record low for the tenor.

The market reaction was swift with 10Y yields promptly dumping to a three day low of 4.20% before reversing the gain and trading just off session lows.

Authored by Mike Shedlock via MishTalk.com,

More and more headlines look as if they are from the Babylon Bee. Let’s discuss the latest idiocrasy from la-la land.

Governor Gavin Newsom courtesy of the Hoover Institute

Background

In California, police don’t arrest criminals because prosecutors will just turn them loose. People and businesses are tired of the crime. The result is a campaign to roll back Soros-backed proposition 47 that made theft of less than $950 in goods a misdemeanor.

Stores are at the mercy of shoplifters and many merchants have decided to close up shop. Downtown San Francisco looks like a ghost town.

California Voter Revolt

The proposition 47 reversal has gathered enough signatures that it will be on the ballot.

However, the Progressive nut cases running the state propose an alternate measure with a laughable poison pill aimed at stopping the rollback.

The Wall Street Journal comments A Voter Revolt Grows in California.

The George Soros-backed initiative cut the state prison count, but Californians are paying a high price. Organized criminals exploit the law’s lax penalties. District attorneys say Prop. 47 prevents them from leveraging the penalty of jail time to induce addicts into treatment. Police often don’t arrest thieves or drug users because the crimes go unpunished. Retail theft, vagrancy and open-air drug use have spiked.

Thus the citizen initiative, which would toughen penalties for shoplifters and drug dealers. Someone with two prior convictions for theft could be charged with a felony on the third offense no matter the amount. The value of stolen property from multiple thefts could be combined for a felony charge.

The initiative would also make possessing fentanyl while carrying a loaded firearm a felony. Dealers could be charged with homicide if their clients overdose. 

Democrats Alternative Solution

Democrats are advancing a package of bills to assuage public anger about surging crime. One would let courts issue restraining orders against thieves, as if this would stop them. Another would toughen penalties for organized criminals who steal more than $50,000 in goods.

Wow. Not even $50,000 currently gets much attention in California. People don’t bother reporting crimes because the police and prosecutors will not do a damn thing about anything.

Poison Pill

In a bizarre twist, Democrats last week threatened to blow up their own legislation by inserting language in the bills that would render them void if voters pass the Prop. 47 reform. 

Let’s discuss how the Democrats bill would work.

Someone commits a 200 shoplifting crimes of which 25 get reported and 3 investigated. The three are immediately released because the amounts are under $950.

Ta Da!

The court issues a restraining order telling these shoplifters “Don’t do it again, or else”.

Or else what?

There is no or else what. Every criminal in California will be openly laughing how stupid this is.

Newsom’s Real Concern

Newsom’s real concern is not crime. He is living in a six-bedroom, 12,000-square-foot mansion in Fair Oaks.

Crime does not concern the governor.

What does concern Newsom is a huge budget deficit. If Prop 47 is reversed more people will be put in prison.

Thanks to union graft with Newsom in bed with union leaders, a need for more prison guards would further bust Newsom’s budget.

Annual Prison Guard Salaries

Image from ZipRecruiter, salaries as of June 10, 2024.

Newsom cant afford more prison guards, more teachers, more union anything because of outrageous base pay and then benefits on top of it.

On October 20, 2023 the Sacramento Bee reported In ‘major policy change,’ these state workers will get state-funded 401(k)s, plus pensions.

Lovely.

And please note correctional officers do not contribute to social security.

Other Benefits

Vision: An eye exam and one pair of glasses once every calendar year. The State pays 100% of the premium; employees pay a $10 (eye exam) and $25 (materials) deductible.

Paid Holidays: Each employee is entitled to receive pay for 13 State holidays observed throughout the year. Additionally, one personal holiday credit is earned each fiscal year.

Paid Leave: Employees receive leave credits for each qualifying pay period. Employees can be paid for accumulated annual leave and vacation credits upon permanent separation from State service.

Transit Subsidy: Employees may be eligible to receive a 75% discount on monthly transit passes and/or rideshare programs, up to $65 per month

Other benefits from California Department of Corrections and Rehabilitation.

Reparations Committee

In Oakland, The Reparations Committee Wants $5 Million in Tax Dollars – Just to Come Up With a Plan

A California Bay Area committee appointed to design racism reparations for black residents wants two years and $5 million just to write a plan.

The funding request comes months after California’s most ambitious reparations plans have crashed and burned amid state and local budget woes. San Francisco abandoned its effort, citing the city’s deficits, after reparations committee members called for $5 million cash payments for every eligible black resident. Instead, local lawmakers settled for an apology.

The California legislature has ignored the idea of direct cash payments altogether, opting instead for ideas like subsidized property taxes and expedited business licenses for black citizens that critics warn may be unconstitutional. Like San Francisco, California is facing massive deficits after Governor Gavin Newsom (D.) rapidly increased spending even as the tax base shrank and the state’s economy lagged.

Local Oakland activist Seneca Scott, who supports reparations, said, “$5 million and two years to research [reparations] is stupid and a grift.” He added that reparations supporters by now should know what they should look like.

Alameda County has its own budget woes, with deficits predicted to reach as high as $100 million. Oakland by itself reported a $117 million shortfall this fiscal year and a likely $175 million shortfall for the next.

The Alameda County lawmaker who created the reparations committee noted the county’s woeful finances and that $5 million “is a hefty amount of funding,” particularly in light of the budget shortfall.

Idiocy in California is Apparently Unlimited

January 10, 2024: The Hotel California Wealth Tax Advances, You Cannot Leave to Escape It

February 4, 2024: Cost of Running a McDonalds Jumps $250,000 in CA Due to Minimum Wage Hikes

March 26, 2024: Proposition 103 Backfires, State Farm to Cancel 72,000 California Policies

March 26: California Restaurants Cut Jobs as Fast-Food Wages Set to Rise

March 30, 2024: California’s Deficit Is $222 Billion and the State is $1.6 Trillion in Debt

May 20, 2024: California Governor Escalates the War on Gasoline Impacting Neighboring States

Voting With Their Feet

Anyone with the means and an ounce of common sense is leaving these Progressive hell holes.

I offer Congratulations to NY, IL, LA, and CA for Losing the Most Population.

On a percentage basis, New York, Illinois, Louisiana, and California lost the most population between 2020 and 2023.

On an absolute basis the top of the list is New York, California, and Illinois.

Texas gained 1,357,842 and Florida gained 1,072,510. Georgia was third with a gain of 315,456.

Twenty Percent of California Lives in Poverty, What’s Going On?

On a cost-adjusted basis, California leads the nation in percentage living in poverty. Blame the Progressive oligarchs like Governor Newsom.

Unemployment rates from the BLS through April. State level data lags by one month. Chart by Mish.

For discussion, please see Twenty Percent of California Lives in Poverty, What’s Going On?

“Today one in five Californians – many working – lives in poverty (using a cost-of-living adjusted poverty rate). The Public Policy Institute of California estimates another fifth live in near-poverty – roughly 15million people in total. With the exception of Asians, the state’s racial minorities do far worse – in education, incomes and homeownership – than they do virtually anywhere else in the country.”

“Even without adjusting for costs, no Californian metro area ranks in the US top 10 in terms of well-paying, blue-collar jobs. But four – Ventura, Los Angeles, San Jose and San Diego – sit among the bottom 10.”

Congratulations Overdue

Apologies offered. I failed to congratulate California when it passed Washington D.C. to take the highest unemployment rate in the nation.

Anyone stupid enough to vote for these Progressive fools deserves what they get.

Unfortunately, the Progressives are taking everyone down with them. The only escape is to leave, as millions have done.

On Tuesday afternoon, Boeing CEO Dave Calhoun will testify before the Senate Permanent Subcommittee on Investigations, chaired by Sen. Richard Blumenthal (D-Conn.), about the ongoing investigations into Boeing’s quality oversight and production failures of commercial jets.

“Our culture is far from perfect, but we are taking action and making progress,” Calhoun said in his prepared remarks released by Boeing and reported by the Washington Post.

Calhoun said, “We understand the gravity, and we are committed to moving forward with transparency and accountability, while elevating employee engagement.” 

The top executive’s “far from perfect” comment understates the severity of the continued Boeing investigations by the Justice Department, Federal Aviation Administration, and other federal agencies since the early January door plug incident on an Alaska Air Boeing 737 Max flight. The exec is also expected to apologize to the family members of the victims who died in the two 737 Max crashes.

“We are deeply sorry for your losses,” he’s expected to say in opening comments, adding, “Nothing is more important than the safety of the people who step on board our airplanes. Every day we seek to honor the memory of those lost.”

And he plans to apologize to the passengers and crew of the Alaska Air flight: 

“We deeply regret the impact that the Alaska Airlines Flight 1282 accident had on Alaska Airlines’ team and its passengers, and we are grateful to the pilots and crew for safely landing the plane. We are thankful that there were no fatalities.”

In recent months, the Federal Aviation Administration ordered Boeing to improve safety and quality before it could resume normal production, sparking plane delivery delays for major airlines, including Southwest, which had to downgrade its financial outlook for the year due to the delays.

Today’s hearing will focus on Boeing’s broken safety culture, two months after whistleblower Boeing engineer Sam Salehpour’s testimony about defective planes to the same subcommittee.

“I have serious concerns about the safety of the 787 and 777 aircraft, and I’m willing to take on professional risk to talk about them,” Salehpour said in his opening statement on April 17, adding,  “I was ignored. I was told not to create delays. I was told, frankly, to shut up.”

Ahead of the hearing, Blumenthal wrote in a statement:

“I look forward to Mr. Calhoun’s testimony, which is a necessary step in meaningfully addressing Boeing’s failures, regaining public trust, and restoring the company’s central role in the American economy and national defense.” 

In markets, Boeing shares are marginally lower in premarket trading in New York. Year-to-date, shares are down nearly 32% on the endless jet problems. 

The executives at Boeing have destroyed one of the world’s greatest aviation brands as competitor Airbus flies ahead.  

Authored by Joshua Mawhorter via The Mises Institute,

Several months ago, I was on a long car trip with my dad, and we listened to a podcast that gave some commentary on the following headlines from the New York Times and the Wall Street Journal: “AI Poses ‘Risk of Extinction,’ Industry Leaders Warn” and “AI Poses ‘Risk of Extinction’ on Par with Pandemics and Nuclear War, Tech Executives Warn.”

Obviously, this was in the wake of new AI technologies like ChatGPT and others. This is also not a new issue. In 2017, the Wall Street Journal also published “Protecting Against AI’s Existential Threat.” Of course, AI has been impressively more developed recently, bringing the usual reactions—assumptions that this technology will totally change everything, amused interest, reasonable concerns (e.g., students cheating), and the typical hand-wringing.

All this was in response to a recent statement from the Center for AI Safety, who posted an open letter with the following warning:

“Mitigating the risk of extinction from AI should be a global priority alongside other societal-scale risks such as pandemics and nuclear war.” As these claims were made, even by creators of the technologies, I had a sneaking suspicion that I already knew what these AI companies wanted: cronyism. Not long after that, my suspicions were confirmed by the inevitable call for that one, vague, seemingly magical word that everybody seems to demand in situations like these. That word is “regulation.”

Arguing a similar point soon after the announcement of this “existential threat,” another writer from the Wall Street Journal perceptively wrote an article titled, “AI is the Technocratic Elite’s New Excuse for a Power Grab.”

That said, while there is certainly a penchant for the technocratic elite to form and expand bureaucracies in order to regulate, it is worth mentioning that very often these very companies are themselves the biggest proponents of government regulation of their industries.

Why would private firms ever want cumbersome government regulation? The answer is cronyism. Cronyism, crony capitalism, “crapitalism,” corporatism, managed capitalism, a “mixed” economy, or fascism are different titles for the same concept.

Whatever the designation, it is a public-private partnership that employs the powers of the state to grant special legal privilege to non-State entities for their mutual benefit at the expense of the consumer/taxpayer.

Private businesses and government are often not enemies but very comfortable friends. More than that, their working together is always in the name of protecting the consumer/taxpayer. Depending on their ideology, people might see themselves teaming up with business against the government or teaming up with government against business, but they rarely recognize that there is a third option—government and business teaming up against the consumer/taxpayer.

By inviting “regulation,” private firms can use the legal apparatus of the government to limit competition, raise barriers to entry for competitors, restrict output for higher prices, and shift the costs of “health and safety” standards to the taxpayers. These are options that businesses and industries would never have save an alliance with the state. The taxpayers will pay the government, via bureaucratic agencies, to inspect and maintain certain standards for businesses, which removes the costs of these standards from the business, subsidizes their operations, and places them on the taxpayer. Oddly enough, this regulative bureaucratic apparatus can simultaneously be burdensome by hampering the productive aspects of a business, assistive in providing for costs to businesses and industries that they would otherwise have to bear, and incompetent in the goal of protecting consumers.

A costly regulatory burden for competitors, an attempt to capture the market, movement toward monopolization, the government as enforcer, and getting the consumer/taxpayer to pay for bureaucracies to write more regulations and inspect standards: What business wouldn’t at least be tempted?

Cronyism has a long history. In fact, monopoly used to mean exclusive legal grants of government privilege to certain companies, not arbitrary standards like firm size, number of firms, or market share. Cronyism has also had a long history in the United States, especially since the Progressive era (ca. 1890–1920). We are often told that the Progressive era involved the government intervening to stop monopoly when the truth is precisely the opposite—the government intervened with a new bureaucratic technocracy, usually at the request of private firms, to stifle competition and impose monopoly.

This took place in all sorts of areas, such as meatpacking, insurance, textiles, money and banking, etc. It turned out, according to G. Edward Griffin, that use of the word “reform” would be enough: “The American people are suckers for the word ‘reform.’ You just put that into any corrupt piece of legislation, call it ‘reform’ and people say ‘Oh, I’m all for “reform,”’ and so they vote for it or accept it.”

Furthermore, while the tendency in America was toward competition, this was unacceptable to many businesses who invited and embraced new “regulations” and “reforms.” Writes historian Gabriel Kolko, “Ironically, contrary to the consensus of historians, it was not the existence of monopoly that caused the federal government to intervene in the economy, but the lack of it.” The simple solution was, “Monopoly could be put over in the name of opposition to monopoly!” The same word was used, but the content could be the opposite. Government, itself a monopoly, was to monopolize industries because, if it didn’t, monopolies might result!Many vaguely call for “regulation” because they may not know what else to ask for whenever they see a problem, but often businesses call for it to use the governmental apparatus to their benefit at the expense of the consumer/taxpayer.

As the new and growing AI industry develops, it should be no surprise that they want “regulation.” It is probably not that they really believe that the AI technology they produce is a literal threat to human existence, but that, by leaning into the scaremongering and the statist non sequitur, they can form a cozy relationship with the government first and legally limit competition to their benefit. The American people are suckers for “reform.”

After several videos plainly showing Joe Biden’s obvious cognitive decline went viral over the last week, the left is now pulling the ‘out of context’ thing, suggesting that they’re edited “cheap fakes” that are “done in bad faith,” and both NBC News and AP running ‘fact checks.’

“The Party told you to reject the evidence of your eyes and ears. It was their final, most essential command.”

— George Orwell, 1984

— RNC Research (@RNCResearch) June 18, 2024

Now, the media is doing ‘fact checks’ to debunk your lyin’ eyes! Check out NBC’s (9 million follower, 25k view in 12 hours, highly ratio’d post with hilarious replies) take:

Misleading GOP videos of President Biden are going viral. The fact-checks have trouble keeping up. https://t.co/ABDPY6fxjP

— NBC News (@NBCNews) June 18, 2024

They’re now calling authentic footage “cheap fakes,” which as we noted yesterday, appears to be coordinated messaging with the White House.

While “deepfakes” are misleading audio, video or images that are created or edited with artificial intelligence technology, a “cheap fake,” according to researchers Britt Paris and Joan Donovan, is a “manipulation created with cheaper, more accessible software (or, none at all). Cheap fakes can be rendered through Photoshop, lookalikes, re-contextualizing footage, speeding, or slowing.”

To recap:

• Biden ‘wandered off’ during a G7 flag ceremony while he was supposed to be taking a photo with other world leaders before Italian Prime Minister Giorgia Meloni shepherded him back to the group. According to the fact checkers, he was ‘paying respects to a paratrooper.’

According to the fact check, “Biden was greeting a parachutist who had just landed as part of the ceremony.”

Yes, requiring Meloni to physically bring him back to the group.

• He then did some weird nursing home mind-meld with the Pope, possibly (definitely) sniffing him. Unsurprisingly, no debunk! Apparently even NBC News couldn’t defend this.

• Then, the Hollywood Reporter‘s Chris Gardner showed a clip of Biden ‘freezing’ on stage last weekend, and having to be similarly guided off stage by former President Barack Obama.

LOL, this “fact checking” thing has really gone too far

Top video: Unedited

Bottom video: Camera switch https://t.co/Uu7i9WZGhj pic.twitter.com/jYT6s7P9n2

— Kyle Becker (@kylenabecker) June 18, 2024

 According to a new ‘fact check’ from AP, citing Jimmy Kimmel’s spokesman and an anonymous source, Biden was simply “pausing” amid cheers.

🙄@AP replaced the word “froze” with “paused,” & added some additional flowery language about “cheers and applause.”

Boom, “fact check.”

As an aside, interesting that such an intense degree of attention is being paid to arguing over what, when compared to all of the various… https://t.co/1ng7fdR7rD

— GeroDoc (@doc_gero) June 18, 2024

The @AP is a far left propaganda machine

— Elon Musk (@elonmusk) June 18, 2024

And wait, is this a cheap fake?

Some pretty obvious airbrushing on Joe Biden’s 81-year-old face https://t.co/QnqqPMDcTU pic.twitter.com/h24PfNeFet

— Alec Sears (@alec_sears) June 18, 2024

… and let’s be honest. This is bizarre behavior, no?

pic.twitter.com/EgwgQ9Qq2u

— GeroDoc (@doc_gero) June 18, 2024

Nobody’s buying it…

It’s the Emperor’s New Clothes, folks.

Nothing to see here, say the “wise” ones

🤡

— Perperpetual Cynic (@ToddSalvatore2) June 18, 2024

Oh wow, can you show us the original videos then.

— The People’s Cube (@ThePeoplesCube) June 18, 2024

Whenever the anti American Democrats do anything: pic.twitter.com/oS3t0pHF87

— Rapidsloth (@Rapidsloth_) June 18, 2024

Agitprop

— Ecm1031 (@ecm1031) June 18, 2024

2+2=5 right NBC?

— Scott (@leavemealone049) June 18, 2024

“they were cheap fakes” 😵‍💫🔊
Karine Jean-Pierre pic.twitter.com/kuKSp1xrW2

— drefanzor memes (@drefanzor) June 17, 2024

I love @JimBreuer!! This is hilarious!!
😂 😂🤣😂😭🤣 pic.twitter.com/IHzg1gGQ30

— 💫✨FOXX✨💫 (@Based1717) June 17, 2024

By Bnejamin Picton, Senior Macro Strategist at Rabobank

Holding and Hoping

US stocks reset record highs overnight as the NASDAQ rose 1.25% and the S&P500 closed up 0.77%. Even European stocks shook off the turmoil of the last few days to close higher. The EuroStoxx 100 was up 0.85%, the DAX rose 0.37% and the CAC40 rebounded from steep losses last week to close up 0.91%.

Oil prices also posted gains with Brent crude up 2.2% to trade back above $84/bbl and WTI closing above $80/bbl. Spot gold sold off 0.58% to $2,319/oz, which may have come as a result of 10-year Treasury yields rising by more than 6bps to 4.27% while the 2-year yields posted similar gains to see the sovereign curve parallel-shift higher. French bonds outperformed Bunds after Marine Le Pen said that she was not seeking “institutional chaos” and was willing to work with Emmanuel Macron if her RN party is as successful in upcoming elections as recent polling suggests.

Overall, yesterday’s price action looks very much like a garden variety risk-on move.

The day ahead will be dominated by the RBA’s June policy rate decision, the publication of the German ZEW survey and the release of May retail sales figures for the United States. The RBA is widely expected to leave the cash rate unchanged at 4.35%, so traders will mainly be searching for signs of an amping up of the Aussie central bank’s minor hawkish bias in the Decision Statement or Governor Bullock’s subsequent press conference.

Rabobank maintains a contrarian forecast on the next move from the RBA being a hike rather than a cut (in fact, we are forecasting two hikes this year). We adopted that forecast following the upside inflation surprise in Q1, which gelled with signals from Australia’s positive output gap, a labour market operating beyond full employment, rising asset prices, accelerating credit growth (which never recaptured the 2019 lows), PMIs back in expansion, a gradual improvement in consumer confidence since early 2023, virtually non-existent productivity growth and subsequent monthly inflation readings that showed the RBA’s favoured core inflation measure drifting higher.

The RBA also has to contend with a fiscal stance that is swinging from mildly contractionary to unambiguously expansionary. The Australian Federal budget included $24bn/year worth of income tax cuts and $10bn worth of additional spending in 2024/25. Additional spending and lower receipts will see the current fiscal year’s small surplus transform into an expected $28bn deficit next year. At the state government level, the purse strings have been loosened even further as a number of long-in-the-tooth administrations throw the proverbial kitchen sink at campaigns for re-election. Australia’s three most populous states are all forecasting large operating deficits in the year ahead. Two of those had previously been forecasting small operating surpluses, so the fiscal pendulum has certainly swung.

The futures market does not agree with our view on Aussie rates. RBA-dated OIS suggests that the cash rate will remain unchanged for the duration of 2024, with a 95% chance of a rate cut at the February policy meeting. It would be remiss of me not to note that there are plenty of arguments in favour of that view. Annual GDP growth of just 1.1% in Q1 was well below conventional estimates of potential growth (2.5% p.a.), and suggests that the output gap is narrowing, while labour market lead indicators (job ads, for instance) continue to show ongoing gradual deterioration – albeit from a generationally strong starting point.

China’s economic performance has an outsized bearing on Australia’s fortunes. Data released yesterday again confirmed ongoing weakness in the Chinese real estate sector, as new home prices fell 0.71% in May, used home prices fell 1%, residential property sales declined 30% year-on-year and the PBOC kept the 1-year MLF rate unchanged at 2.50%. Consequently, SGX iron ore futures and LME copper both finished lower on the day, which is bad news for Australia’s terms of trade.

The June ZEW survey is expected to show further improvement for both the ‘expectations’ and ‘current situation’ readings, continuing a developing theme of things starting to look better for Europe (at least economically). The expectations index has been rising since late 2022, and the consensus estimate of economists surveyed by Bloomberg suggests that it will rise another 2.9pts to a 50 reading today. The ‘current situation’ index has been tracking broadly sideways since October of last year, but surveyed economists expect a pickup to -65 from last month’s -72 reading. With the ECB having recently delivered the first cut of an expected easing cycle, the hope will be that assessments of the current situation begin to converge on the much more upbeat view of the road ahead.

US retail sales are expected to rebound from a -0.3% month-on-month slump in April to post growth of 0.5% in May. Signs of resilience in retail spending would justify the caution of Philly Fed President Harker, who commented yesterday that the Fed needed to wait for several more months of data before cutting rates. Harker said that the softer-than-expected May CPI result was encouraging, but not sufficient, and that one rate cut in 2024 would be appropriate based on the current outlook. That’s a little more conservative than Rabobank’s house view on the Fed Funds rate. We expect the Fed to cut rates in September and December as the US economy softens into a mild recession in the final quarter of the year.

President Joe Biden on Tuesday announced that his administration won’t deport many illegal immigrants who are married to US citizens, or whose parent is married to a US citizen.

This translates to roughly 500,000 spouses of US citizens, along with 50,000 children, who won’t be deported and will be given the ability to gain legal status without leaving the United States, the White House said.

The new program, run by the Department of Homeland Security, will apply to illegal immigrant adults who have lived in the US for at least 10 years as of June 17, and are married to a US citizen.

Biden will read a teleprompter on Tuesday afternoon during an event to celebrate the 12th anniversary of the Deferred Action for Childhood Arrivals (DACA) program launched under President Barack Obama while Biden was VP.

As of Sept. 30, 2023, there were 544,690 migrants with protection under the program.

Whose vote is Biden courting here?

According to the White House, the new program “will promote family unity and strengthen our economy, providing a significant benefit to the country and helping U.S. citizens and their noncitizen family members stay together.”

As the Epoch Times notes further, typically people who enter the country illegally must leave and obtain legal status before re-entering the United States.

“In the weeks ahead—and I mean the weeks ahead—I will speak to how we can make our immigration system more fair and more just,” he said at the time.

The requirements for the new program mean that it will apply to people who are embedded in communities across the nation. On average, those eligible for the process have resided in the United States for 23 years, according to the White House.

“President Biden believes that securing the border is essential. He also believes in expanding lawful pathways and keeping families together, and that immigrants who have been in the United States for decades, paying taxes and contributing to their communities, are part of the social fabric of our country,” according to the White House statement.

The president also said that his administration is making it easier for illegal immigrants who received protection under DACA, earned a college degree, and received an offer of employment from a U.S. business to obtain work visas.

The announcement quickly drew praise from some, who said the program would be welcome news to those affected.

“An estimated 55,000 immigrants in the Houston area are married to U.S. citizens and many of them will now be able to live, work, and raise a family without the fear of deportation,” Rep. Sylvia Garcia (D-Texas) said in a statement.

Others decried the move.

Stephen Miller, who was a top adviser on immigration during the Trump administration, described it on the social media platform X as an “unconstitutional amnesty to illegal aliens”.

Sen. John Cornyn (R-Texas) said that the program would incentivize more illegal immigration, and be subject to legal challenges.

Former President Trump said on his Truth Social platform on Monday that he oversaw a safe border but that the situation was “ruined” by President Biden. He vowed to correct the situation if he is elected in November.

Authored by Daniel Lacalle,

The University of Michigan Consumer Sentiment Survey plummeted to its lowest level in seven months.

The index reading for June came in at 65.6, down from 69.1 in May and under the consensus expectation of 72. In the current conditions and expectations categories, the survey fell below economists’ expectations.

Year-ahead inflation expectations were unchanged this month at 3.3%, but above the 2.3–3.0% range seen in the two years prior to the pandemic, according to the press release. Long-run inflation expectations rose from 3.0% last month to 3.1% in June, significantly above the 2.2-2.6% range seen in the two years pre-pandemic. This survey indicates how weak the U.S. economy is and how consumers are feeling the persistent inflation.

Joe Biden posted on X “Zero. That was monthly inflation in May. There is more to do still, but this is welcome progress.”

Inflation was 3.3% in May, and services, shelter, and electricity increased by 5.3%, 5.4%, and 5.9%, respectively.

A zero increase in June in the CPI reading is not zero inflation in the month. Consumers in America may find these optimistic messages exaggerated and almost propagandistic.

Furthermore, CPI inflation should have been significantly lower, close to 2%, months ago. Is it welcome progress, as the president says? Not really. However, the underlying message of the X post is probably closer to “it could have been worse.”.

We must remember that the Inflation Reduction Act has perpetuated inflation, as unnecessarily aggressive fiscal policy sabotaged the Fed’s decision to reduce the quantity of money in the system. The federal deficit is fueling inflation and keeping the CPI measure above the level where it should have been for at least twelve months.

Neo-Keynesians frequently point to the path of disinflation as a triumph of the soft-landing approach. The economy did not enter a recession, unemployment is low, and prices are cooling off gradually. There is an evident counterargument to this optimistic view. The United States economy would have recovered faster, and consumers would not have suffered flat real wage growth, a loss of purchasing power and crippling debt. The idea that government spending has strengthened the economy has no merit. Excessive government intervention is a direct cause of the unsustainable deficit, rising taxes, ongoing inflation, and weaker productivity growth.

Both the labour participation rate and employment-to-population ratios remain below pre-pandemic levels. Real wage growth has been almost flat for years. Inflation is a hidden tax, and it has worsened the recovery path of the United States. The deficit has fueled inflation.

The U.S. consumer has been adding debt to maintain consumption, and credit card debt has reached new record levels. This is not a strong economy.

The problem is that the economy is weakening in the middle of an enormous fiscal expansion and debt continues to rise at an alarming pace while interest expenses reach new highs. Keynesian policies have weakened the fabric of the private sector and small and medium-sized businesses.

The discontent we are seeing in all developed countries is typical. Governments have focused on inflating headline macro figures, forgetting the average consumer and small businesses. Large corporations have been able to navigate these incorrect policies because of their financial muscle. However, families and small businesses are living a Keynesian nightmare. Employed yet impoverished, while businesses struggle to stay afloat. So, what is the problem? The imbalances in the public sector will generate less growth, higher taxes, and more challenges in the future. Public debt is not a tool for growth; it is a burden.

There have been a few comments in financial papers stating that the consumer confidence reading may come from negative analysis on social media. The St. Louis Fed reports that “observers have cited disproportionally circulated negative economic news on social media as one possible reason for poor sentiment, disconnected from a robust economy.” Another common view is that while inflation is cooling, the price level is still higher than it was a few years ago, and consumers have not yet adjusted. High prices are a factor, but they primarily work by eroding incomes, which has been found to have considerable influence on consumer sentiment.” Blaming negative economic news makes no sense. The Consumer Sentiment Survey was at an all-time high in 2019, a period when there was general media negativity regarding the economy and the administration. Inflation and higher taxes are more likely reasons why consumers are depressed. Even the gross domestic income figure shows that things are not as solid as the government thinks. If we look at the discrepancy between GDP and GDI, or the difference between the unemployment rate and labour force participation, as well as real wages compared to nominal readings, we can understand why citizens are unhappy. Bloating GDP with debt always ends badly.

Unconfirmed footage has emerged on X showing what appears to be the commodity-hauling bulk carrier “Tutor” under attack by a drone boat, allegedly controlled remotely by Iran-backed Houthi rebels. If verified, this incident is the first known drone boat attack on a commercial vessel in the Red Sea since rebels began their attacks on the critical maritime chokepoint in late 2023. 

“Footage shows what appears to be the first successful Houthi kamikaze USV strike on Greek-owned cargo ship Tutor while transiting the Red Sea on June 12,” X user Clash Report wrote in the post. 

Clash Report said, “The ship’s guard were totally confused as to what they were observing” and “couldn’t even react before it hit the ship.” 

The first image shows the bulk carrier’s armed guards were extremely confused by the small craft packed with explosives and possible mannequins.

Everyone is confused. 

The video shows the crew and armed guards running inside moments before the small craft hit the stern of the bulk carrier.

Photos of Houthi kamikaze USV right before it struck Greek-owned cargo ship Tutor.

The ship’s guard were totally confused as to what they were observing.

They couldn’t even react before it hit the ship. https://t.co/ZwFlWnsFAR pic.twitter.com/8ORRrvZWH6

— Clash Report (@clashreport) June 17, 2024

An aerial video shows the Tutor has taken on water in the stern area. Prior reports say the engine room has been flooded.

On Saturday, we reported that 21 of the 22 Filipino seafarers aboard the Liberian-flagged, Greek-owned, and operated bulk carrier were rescued by the US military. Reports say one crew member died in the blast.

What good were the armed guards if they didn’t use surveillance drones to inspect the incoming vessel? Moreover, the video shows that not a single shot was fired from their 7.62x39mm rifles.

More broadly, the attacks across the Red Sea and Gulf of Aden have already cost the US military (taxpayers) about $1 billion in munitions to counter anti-ship ballistic and cruise missiles and suicide drones, according to Axios. 

A weak Biden administration has only emboldened Houthis to continue firing missiles and drones, and now suicide drone boats, at Western-linked commercial ships and or military vessels. As we’ve explained before, the turmoil on the shipping lane is causing a supply shock.

Commodity traders have told us they expect a tick-up in attacks on the Red Sea. Last week was the first instance the Houthis used a drone boat. Also, focus on the Mediterranean area for expanded threat coverage by Houthis.