It was a deal that nobody could refuse. The debt ceiling deal was passed with a 63-36 majority in the Senate. Thank goodness for centrists who realized that defaulting would be very bad for everyone.
The JOBS report was solid. Nonfarm payrolls increased 339k last month, after revising up the prior April figure to 294k. So, that’s one point for the hawks. Underneath the surface, though, unemployment grew to 3.7%, and wage growth slowed. So, a half a point to the doves. Most likely it gives the Fed cover to wait until July to hike.
Lululemon popped after reporting a strong quarter and increasing the year’s guidance. Other retailers have to be taking note, after posting the opposite. They need to invest in hot pants technology…
Amazon talking to carriers about offering cheap ($10/mo) or free mobile service to Prime customers? Bring it on. The company had flat Prime membership y/y after hiking its Prime rate from $119 to $139. With Walmart on its heels offering similar perks plus free grocery delivery on orders $35+, and with inflation biting customers’ wallets, they’re getting creative and leveraging their size. Carriers have to leverage their investments in 5G.
That’s what a lot of countries are pressing to do. We’ve mentioned it more than a few times here in Arrows, and watch out—this will continue to be a story for this decade. Brazil and China are settling trade with local currencies. India and Malaysia did the same. India is buying Russian oil outside of the greenback. South Korea and Indonesia signed an accord to promote exchanges of won/rupiah. Heck, even France is using yuan for some biz. Roughly 88% of all global f/x transactions are in USD, per the Bank for Intl Settlements. By using the USD in its sanctions programs, the US fuels countries’ desire to find an alternative, when they can. While this won’t be a quick change—and certainly in times of concern the USD will be a safe haven—we expect a continued chipping away at the USD.
Is your best offense, per NATO. They’re asking members to spend at least 2% of GDP ASAP and increase output of ammunition stocks. Everyone has been supporting Ukraine, and they want to fill their coffers.
China is considering new ways to prop up the dampened property sector, for example reducing down payment levels in big cities in non-core areas, reducing agent commissions, and relaxing curbs for residential purchases. Also, there could be some edits to the gov’s 16-point rescue package last year to boost things. Developer debt (roughly 12% of China’s GDP, per BBG) is at risk of default.
