Zafrul: Malaysia set to improve position in IMD's 2025 competitiveness ranking
==========

The government is confident that Malaysia’s position in the International Institute for Management Development's (IMD) World Competitiveness Ranking 2025 will improve from this year, driven by an increase in high-technology product exports. Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said a reduction in the country’s high-technology exports influenced Malaysia’s lower positioning in the IMD list this year, and this is a short-term situation that is expected to improve in 2025. Malaysia’s lower position in the IMD competitiveness ranking this year resulted from a fall in electronic communications exports due to lower global demand, and increased global competition for electronic communications products. However, global sales of semiconductors are projected to increase in 2024 and 2025, benefiting Malaysia as the world’s sixth largest semiconductor exporter. Stable economic growth, low unemployment, and controlled inflation rate are expected to improve Malaysia’s position in the near future.

#Malaysia #CompetitivenessRanking #Imd #Exports #HightechnologyProducts #Investment #Semiconductors

https://theedgemalaysia.com/node/716400 

 China’s spate of violence prompts outburst of economic anxiety
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Chinese social media users express discontent about the nation's economic downturn following a spate of violent attacks. A stabbing incident in a Shanghai metro station becomes a top trending topic on social media, with users speculating on the attacker's motive. The public reaction highlights growing fears over China's economic downturn, particularly in the property market. Protests over the economy, especially the housing crash, have become more frequent. Similar reports of violent attacks have been reported across China. Chinese authorities are aware of the link between economic changes and rises in violence. Mental health issues, compounded by economic pressures, are seen as contributing factors to acts of random violence.

#China #EconomicDownturn #Violence #SocialMedia #PropertyMarket #Protests #MentalHealth

https://theedgemalaysia.com/node/716383 

 CBO projects FY2024 US deficit to jump to US$1.9 tril amid higher outlays
==========

The US budget deficit is projected to reach US$1.915 trillion for fiscal 2024, surpassing last year's US$1.695 trillion gap. The Congressional Budget Office (CBO) attributes the increase to higher outlays for student loans, Medicaid, bank failure costs, and aid to Ukraine and Israel. These higher outlays account for 80% of a US$408 billion increase in this year's projected deficit. The CBO also raised its cumulative deficit forecast for the fiscal 2025-2034 decade to US$22.083 trillion, up US$2.067 trillion from the February projection. The estimates assume that the individual tax cuts passed by Republicans in 2017 will expire on schedule at the end of 2025. The CBO also updated its US economic projections, increasing its forecast for real gross domestic product growth to 2.0% for calendar 2024.

#UsBudgetDeficit #Cbo #FiscalProjections

https://theedgemalaysia.com/node/715887 

 Amazon fined US$5.9m over warehouse worker quotas in California
==========

Amazon has been fined US$5.9 million by the California Labor Commissioner for failing to properly inform workers of productivity quotas at two warehouses in California. The fines were issued in May and were announced by the office of California Labor Commissioner Lilia Garcia-Brower. Amazon violated a 2022 California law that requires employers to provide written descriptions of quotas to workers if they can be disciplined for failing to complete jobs at a specified speed. The violations occurred nearly 60,000 times in a five-month period ending in March at warehouses in Moreno Valley and Redlands. Amazon is appealing the citations and denies having fixed quotas for warehouse workers. The alleged quota system has been a focus of a nationwide campaign to unionize Amazon's warehouses.

#Amazon #California #WarehouseWorkers #ProductivityQuotas #Unionization

https://theedgemalaysia.com/node/715886 

 Global rate-cut juggernaut struggling to start
==========

Central banks in advanced economies are hesitant to join the global interest-rate cutting cycle. The Federal Reserve recently reduced projections for US monetary easing, and policymakers in the UK, Australia, and Norway are likely to signal that they are not convinced enough about disinflation to start lowering borrowing costs. June, originally expected to be a month of global rate cuts, is turning out to be a display of hesitancy. The Bank of England is expected to wait until at least August before cutting rates due to the upcoming election and lingering price pressures. Peers in Australia and Norway are also in no rush to cut rates. The Swiss National Bank may avoid a second reduction for now. Other central banks, such as Brazil and Paraguay, are expected to keep borrowing costs on hold, while Chile may slow rate cuts. US retail sales, Chinese data, and inflation numbers from the UK and Japan will be highlights for investors this week.

#CentralBanks #InterestRates #RateCuts #Disinflation #BorrowingCosts #FederalReserve #BankOfEngland #SwissNationalBank #Brazil #Paraguay #Chile #UsRetailSales #ChineseData #Inflation #Uk #Japan

https://theedgemalaysia.com/node/715642 

 New MM2H participants not eligible for PR status, says tourism minister
==========

New participants of the Malaysia My Second Home (MM2H) programme in all three categories — Platinum, Gold and Silver — are not eligible to apply for permanent resident (PR) status, according to Tourism, Arts and Culture Minister Datuk Seri Tiong King Sing. The government has agreed to introduce new participation requirements for the MM2H programme to attract high net-worth individuals and digital nomads. The MM2H programme, introduced in 2002, allows foreigners to purchase property and reside in Malaysia. New MM2H applications have been handled by the Immigration Department since October 2021. MM2H applicants are categorised into three tiers — Platinum, Gold and Silver — with specific criteria and conditions. The Platinum category requires a fixed deposit of US$1 million, the Gold category requires US$500,000, and the Silver category requires US$150,000. Motac has started processing and approving MM2H Tourism Business Operation Licences based on newly streamlined conditions. The new requirements for the MM2H Tourism Business Operation Licence include raising the company’s paid-up capital to a minimum of RM200,000, setting the annual licence fee at RM2,500, and having a business premises with a valid address.

#Mm2h #PermanentResident #Tourism #Malaysia

https://theedgemalaysia.com/node/715627 

 US jobless claims rise to highest in nine months, led by California
==========

Initial applications for US unemployment benefits increased by 13,000 to 242,000 in the week ended June 8, the highest level in nine months. The rise was led by a large increase in California. The US unemployment rate rose to 4% last month, reflecting people returning to the workforce and not finding a job. Layoffs, however, have remained subdued. New claims before adjustment for seasonal influences rose by 38,530 to 234,707 last week. The four-week moving average increased to 227,000, the highest since September. Continuing claims rose to 1.82 million in the week ended June 1. Federal Reserve Chair Jerome Powell said the labor market remains strong but is gradually cooling with supply and demand coming into better balance.

#UsJoblessClaims #UnemploymentRate #LaborMarket

https://theedgemalaysia.com/node/715436 

 US job market resembling pre-pandemic environment, Yellen says
==========

US Treasury Secretary Janet Yellen stated that the US job market is increasingly resembling the pre-pandemic environment. Yellen mentioned that the labor market has become more normal, with a decline in job openings and an increase in labor force participation. She also noted that wage growth is slowing down, but it is not a threat to inflation. Yellen highlighted that the remaining inflation is mainly in housing markets, where drops in elevated rents are slower to take effect. She emphasized that higher costs of housing, education, healthcare, and other necessities are affecting Americans' view of the economy. Yellen mentioned that President Joe Biden will continue to address the high cost of living. Additionally, Yellen proposed that the Group of Seven (G7) back a loan to Ukraine, repaid by frozen Russian assets, to help Ukraine fight Russia's invasion. She stated that the loan proposal could be a meaningful amount, around $50 billion.

#UsJobMarket #PrepandemicEnvironment #Yellen #Inflation #Biden'sEconomicAgenda #G7 #Ukraine #Russia'sInvasion

https://theedgemalaysia.com/node/715428 

 My Say: Global economic outlook is a glass half full, half empty
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The global economic outlook is a mix of optimism and potential perils. The US economy is cooling at a desirable pace, with the manufacturing sector weakening but the services sector remaining strong. China's outlook is uncertain due to a slowdown in the real estate sector, but policy support and improving economic momentum suggest recovery. East and Southeast Asian economies exposed to the technology sector are benefiting from the uptick in the tech cycle. However, the rising risk of a trade war poses a significant threat to the world economy. China's dominance in global exports and its competitiveness are causing tensions with other countries. The fiscal position of the US and its potential impact on the US dollar is another concern. Southeast Asian governments need to strengthen their resilience to financial shocks and protectionism, boost policy buffers, and leverage trade agreements to mitigate risks.

#GlobalEconomy #UsEconomy #China #TradeWar #TechnologySector #UsDollar #Resilience

https://theedgemalaysia.com/node/714787 

 Malaysia should get rid of New Economic Policy, says former minister Idris Jala
==========

Former minister Datuk Seri Idris Jala suggests that Malaysia should replace the New Economic Policy (NEP) with a more inclusive framework that helps the poor regardless of race and religion. The NEP, introduced in 1971, aimed to reduce ethnic inequalities and eradicate poverty by promoting Bumiputera participation in higher education and enterprise management. Idris believes that a new policy should provide equal affirmative action for all individuals in the B40 category, regardless of their race or religion. He also emphasizes the need for radical changes to escape the middle-income trap and attract Malaysians living abroad to return home. Idris was previously a minister in the Prime Minister's Department and the CEO of the Performance Management and Delivery Unit (Pemandu) from 2009 to 2015, leading the Economic Transformation Programme (ETP) to make Malaysia a high-income country by 2020. However, the depreciation of the ringgit prevented Malaysia from reaching high-income status by 2015. In 2022, Malaysia's gross national income (GNI) per capita was US$11,830, still lower than the World Bank's definition for high-income economies of US$13,845.

#Malaysia #NewEconomicPolicy #InclusiveFramework #Poverty #Race #Religion #B40Category #MiddleincomeTrap #AffirmativeAction #EconomicTransformationProgramme #HighincomeCountry #GrossNationalIncome

https://theedgemalaysia.com/node/715057 

 BlackRock cautious on long-term US Treasuries ahead of elections
==========

The BlackRock Investment Institute is cautious on long-term U.S. Treasuries ahead of the November presidential elections. The institute expects investors to demand more compensation to hold them due to wide fiscal deficits. It maintains an 'overweight' recommendation for short-term U.S. Treasuries in a high interest rate environment and remains neutral on longer-dated U.S. government bonds. The institute believes that regardless of who wins the election, budget deficits will remain large, leading to high inflation and elevated interest rates. The Treasury will sell nearly $120 billion in bonds this week, and demand for the auction is closely scrutinized due to concerns about U.S. debt sustainability. Some investors are allocating funds to avoid losses if Treasury yields surge due to supply and demand imbalances. Jimmy Chang, chief investment officer at Rockefeller Global Family Office, expects the return of bond vigilantes, but the timing is uncertain.

#Blackrock #UsTreasuries #Elections #FiscalDeficits #InterestRates

https://theedgemalaysia.com/node/715006 

 Ringgit seen strengthening further to 3.43-3.45 against Singapore dollar by year-end
==========

The ringgit is projected to stabilize further by year-end, ranging between 3.43 to 3.45 against the Singapore dollar. Factors boosting demand for the ringgit include foreign direct investments flowing into Malaysia, particularly the Johor-Singapore Special Economic Zone (JS-SEZ). The Malaysian ringgit peaked at RM3.5682 versus the Singapore dollar on Feb 20, 2024, and currently fluctuates around RM3.4868, reflecting a 2.3% gain. The economist also highlighted the synergistic efforts between the government, government-linked companies, and government-linked investment companies in fostering an environment conducive to greater conversion of foreign currencies into the Malaysian ringgit. However, the sustainability of the ringgit's surge might depend on external factors, particularly decisions by the US Federal Reserve regarding interest rates.

#Ringgit #SingaporeDollar #ForeignDirectInvestments #JohorsingaporeSpecialEconomicZone #MalaysianEconomy #UsFederalReserve #InterestRates

https://theedgemalaysia.com/node/714966 

 Global stock index rises slightly while euro falls, yields up
==========

MSCI's global equities index edged higher while the euro fell after French President Emmanuel Macron called a snap election. U.S. Treasury yields rose as investors digested labor market data and looked toward consumer price data and a Federal Reserve policy announcement. European stocks slipped due to political uncertainty in France. The euro fell to a one-month low against the dollar. The Dow Jones Industrial Average, S&P 500, and Nasdaq composite marked record closing highs. Investors are eagerly awaiting U.S. consumer price index (CPI) inflation data and the Fed's next policy decision. U.S. Treasury yields rose, reflecting higher rate expectations. The dollar strengthened against the euro and the Japanese yen. Oil prices rose to a one-week high, while gold prices rebounded.

#StockMarket #Euro #Yields #InflationData #FederalReserve #PoliticalUncertainty #DowJones #S&p500 #Nasdaq #TreasuryYields #Dollar #OilPrices #GoldPrices

https://theedgemalaysia.com/node/714933 

 Trump tax cut renewal is winning Wall Street, but could cost US$4.6 tril
==========

The prospect of renewing expiring portions of Trump's 2017 tax cuts is attracting Wall Street donors, but it could add US$4.6 trillion to the national debt. Independent analyses show that the tax cuts did not pay for themselves in 2017 and will not do so if renewed in 2025. The US government's debt load and interest costs have increased significantly due to the deficit-financed tax cuts, pandemic stimulus, and Biden administration spending. The Congressional Budget Office estimates that extending the tax cuts would cost US$4.6 trillion over the next decade. While some Republicans deny the cost, others propose cutting social programs or increasing tariffs to offset the expense. President Biden's approach is to extend the lower rates for individual taxpayers making less than US$400,000 a year and raise taxes on corporations and the wealthy. Economists largely agree that the claim that tax cuts pay for themselves is misleading. The revenue loss from the tax cuts would only be partially offset by increased investment and growth. The fiscal impact of the tax cuts would be significant, and the level of budget pain needed to offset the revenue loss would be unprecedented. The article presents different viewpoints on the impact and effectiveness of the tax cuts.

#TrumpTaxCuts #WallStreet #NationalDebt #UsGovernmentDebt #TaxPolicy #EconomicImpact

https://theedgemalaysia.com/node/714608 

 US service providers chalk up strongest growth in nine months
==========

The US services sector expanded in May by the most in nine months, with the Institute for Supply Management's composite gauge of services jumping 4.4 points to 53.8. The business activity index soared 10.3 points to 61.2, the highest level since November 2022. Thirteen services industries reported growth, led by real estate and health care, while five sectors, including retail trade, noted a decline. The ISM index of prices paid for materials and services cooled to 58.1 from 59.2. The supplier deliveries index climbed to the highest level since November 2022, indicating slower delivery times. The measure of services employment climbed but remained in contraction territory.



https://theedgemalaysia.com/node/714315 

 Dalio warns of US-China ‘economic warfare’ among top global risks
==========

Ray Dalio warns that internal conflicts, particularly regarding the acceptance of the US election result, will be a highlight of this year. He highlights the risk of economic sanctions between the US and China, which would be detrimental to the world. Dalio believes that economic warfare often precedes military warfare and raises concerns about the one-China policy and the potential negative consequences for American investors in China. He suggests effective diversification in investments across countries, currencies, and asset classes. Dalio prefers equity assets over debt and recommends including gold in investors' portfolios. He also mentions the attractiveness of Chinese assets and the potential for neutral countries to fare better in a war. Dalio emphasizes the need for diversification and paying attention to quantity. 

#RayDalio #UsElection #EconomicSanctions #China #Diversification #EquityAssets #Debt #Gold #OnechinaPolicy

https://theedgemalaysia.com/node/714256 

 US farmers opt for soy to limit losses as all crop prices slump
==========

US farmers, including Mark Tuttle and Evan Hultine, are planting more soy and less corn on their farms in northern Illinois to limit losses as prices for both crops hover near three-year lows. Tuttle even broke the traditional soy-corn-soy rotation for field management by planting soybeans in one of his fields for a second straight year. The US Department of Agriculture (USDA) forecasted that farmers would plant 86.5 million acres of soybeans nationwide this spring, the fifth most ever. Some analysts expect soybean acres to increase by another million acres or more as heavy rains close the window on corn planting. However, planting more soy at a time of sputtering demand from importers and domestic processors will only serve to drive prices lower, further swell historically large global supplies, and erode US farm incomes. The expansion of soy plantings is expected to swell the US soy stockpile next season by more than 30% to the highest in five years and the sixth highest level on record as demand from the domestic and export markets is not keeping pace with rising production. Farmers are favoring planting soybeans rather than corn because they require less fertiliser and pesticides and seed costs tend to be lower. However, high interest rates have been a particularly painful expense for farmers. Cash prices offered for the next corn and soybean harvest have improved from earlier this spring, but neither crop pencils a profit at current prices. Rain-saturated fields in some areas could clip corn acres and even further expand seedings of soybeans, which can be planted well into June without significant risk to yields. Weather delays and a favorable price versus corn could boost soy plantings by 500,000 to one million acres above the USDA's latest forecast for 86.5 million.

#UsFarmers #Soy #Corn #CropPrices #Losses

https://theedgemalaysia.com/node/714130 

 Hedge fund Dymon bucks the trend by expanding Hong Kong office
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Hedge fund firm Dymon Asia Capital is expanding its Hong Kong office in the Landmark commercial complex. The new office in Edinburgh Tower will be 7,000 sq ft and can accommodate more than 70 employees, double the capacity of its current office. The expansion comes at a time when Hong Kong is experiencing record premium office vacancies and declining rental rates. The vacancy rate for grade-A offices in Hong Kong reached an all-time high of 16.7% in March, and rents have declined for 20 consecutive quarters. Despite this, Dymon has chosen to expand in Hong Kong due to a growing pool of talent in the city. Hongkong Land Holdings Ltd, the owner of the Landmark commercial complex, saw its shares rise 3.6% in response to the news. Dymon plans to move into its new office in the early fourth quarter.

#HedgeFund #DymonAsiaCapital #HongKong #OfficeExpansion #VacancyRate #RentalRates

https://theedgemalaysia.com/node/714038 

 Nasdaq, S&P 500 rise on chips, megacaps boost
==========

The Nasdaq and the S&P 500 inched up on Monday as falling US Treasury yields boosted megacap growth stocks. Megacap stocks including Apple, Meta, and Alphabet gained between 1.1% and 1.7%. AI leader Nvidia rose 3.4% and announced the rollout of its next-generation AI chip platform in 2026. GameStop shares soared 26.8% after a US$116 million bet on the gaming retailer by stocks influencer Keith Gill. NYSE Equities is investigating a reported technical issue that caused volatility pauses for dozens of stocks. A survey from the Institute for Supply Management showed manufacturing activity eased to 48.7 in May. The S&P 500 and the Nasdaq ended May with strong gains. Attention turns to crucial data this week, including surveys on the manufacturing and services sector, factory orders, and the nonfarm payrolls report. At 10.14am ET, the Dow Jones Industrial Average was down 0.12%, the S&P 500 was up 0.22%, and the Nasdaq Composite was up 0.62%. Paramount Global rose 7.1% after a report that Skydance Media was poised to take over the company. JetBlue Airways forecast a smaller drop in second-quarter revenue than previously forecast. Advancing issues outnumbered decliners on both the NYSE and the Nasdaq.

#Nasdaq #S&p500 #UsTreasuryYields #MegacapStocks #Apple #Meta #Alphabet #Nvidia #Gamestop #NyseEquities #InstituteForSupplyManagement #DowJonesIndustrialAverage #ParamountGlobal #SkydanceMedia #JetblueAirways

https://theedgemalaysia.com/node/713972 

 US firms grow more pessimistic on economic outlook, Fed survey shows
==========

US economic activity continued to expand from early April through mid-May but firms grew more pessimistic about the future while inflation increased at a modest pace, a US Federal Reserve (Fed) survey showed on Wednesday, as central bankers mull how long they will need to keep interest rates at current levels. The survey, released roughly every six weeks, comes as policymakers remain uncertain on when to start a rate-cutting cycle after holding interest rates in the range of 5.25% to 5.50% for the past 10 months. Most Fed districts reported slight or modest growth in activity, while two noted no change in activity. The Fed's benchmark interest rate is set to remain unchanged at the next policy meeting on June 11-12 and Fed officials, while all but ruling out another rate hike, have indicated they need consistent encouraging inflation data over a number of months before lowering borrowing costs after being stung by bigger-than expected price increases the first three months of the year. US job gains were the fewest in six months in April and the increase in annual wages fell below 4% for the first time in nearly three years, but the labour market remains fairly tight.



https://theedgemalaysia.com/node/713601 

 Americans expect more student-debt forgiveness in NY Fed survey
==========

The average perceived likelihood of a year-ahead increase in federal student debt forgiveness rose to 39% in April compared to 28.7% in December, according to a survey conducted by the Federal Reserve Bank of New York. The expectations for federal student debt forgiveness were highest among older Americans, with the share of consumers age 45 and older anticipating more relief rising sharply. Over 10% of Americans with federal student loans have been approved for some measure of debt relief under President Joe Biden. Roughly 43 million Americans owe $1.6 trillion in student debt. Missed federal student loan payments will not be reported to credit bureaus until the fourth quarter of this year. The US Department of Education announced that interest rates on federal student loans for the upcoming academic year will be the highest in more than a decade.



https://theedgemalaysia.com/node/713417 

 Fed's Kashkari wants significant progress on inflation before rate cuts
==========

Minneapolis Federal Reserve Bank President Neel Kashkari stated that the US central bank should wait for significant progress on inflation before cutting interest rates. Kashkari mentioned that many more months of positive inflation data are needed to give him confidence in dialing back rates. He also mentioned that if inflation fails to come down further, the central bank could potentially even hike rates. In April, Kashkari had penciled in two interest rate cuts for this year, but if inflation continues to stall, none may be required by year-end.



https://theedgemalaysia.com/node/713333 

 Higher path for rates boosts need to lift revenue, says Yellen
==========

Treasury Secretary Janet Yellen says the outlook for higher interest rates over the long haul makes it tougher to contain US borrowing needs. Yellen emphasized the importance of boosting revenue in negotiations with Republican lawmakers. The Biden administration's budget proposals aim to ensure a sustainable fiscal trajectory. Yellen highlighted the metric of inflation-adjusted interest payments compared with GDP, aiming to keep it below 2%. Goldman Sachs economists project net real interest payments reaching 2.3% by 2034. Soaring interest rates have made it more expensive for the government to service its debt. Yellen mentioned the upcoming tax negotiation and the need to pay for any extended provisions through new revenue. She suggested implementing the 2022 global corporate minimum tax deal as one way to fund the provisions. Biden's budget includes tax hikes on capital gains and on households worth at least $100 million. Yellen's views on borrowing costs have shifted, as she previously suggested longer-term yields could come down.

#JanetYellen #UsBorrowing #InterestRates #Revenue #BudgetProposals #DebtService #TaxNegotiation #RevenueraisingProposals

https://theedgemalaysia.com/node/713038 

 European G7 ministers warn over China trade war risks
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European finance ministers from the Group of Seven (G7) wealthy democracies called for a common front against China's "unfair" industrial policies and warned of the risks of a trade war after US tariff hikes against Beijing. Washington last week unveiled increased duties on Chinese imports, triggering concerns of retaliation and fragmentation in global commerce. The US is not calling on its partners to take similar measures, but Treasury Secretary Janet Yellen wants the G7 allies to show they stand with Washington. German Finance Minister Christian Lindner stated that "trade wars are all about losing, you can't win them." Italian Economy Minister Giancarlo Giorgetti said it may only be a matter of time before the European Union (EU) follows the US lead on tariffs. The G7 ministers also discussed a loan to Ukraine backed by future income from frozen Russian assets, but no hard details emerged. The G7 will address a proposed global wealth tax on billionaires, but the US and Germany expressed reservations.

#G7 #China #TradeWar #UsTariffs #Ukraine #GlobalWealthTax

https://theedgemalaysia.com/node/712955 

 Goldman now sees US debt-cost ratio rising into danger zone
==========

Goldman Sachs Group Inc. has updated its longer-term US fiscal outlook, projecting a key metric of debt sustainability to reach historically extreme levels. The bank's economists Manuel Abecasis and David Mericle note that higher expected future interest rates have substantially worsened the trajectories of the debt-to-GDP ratio and real interest expense as a share of gross domestic product. Treasury Secretary Janet Yellen has referenced net inflation-adjusted interest payments as a proportion of GDP as her main metric of debt sustainability. Goldman's updated projections have that ratio climbing steadily to 2.3% by 2034, compared to the bank's previous prediction of 1.5%. The bank also forecasts the US debt-to-GDP ratio to reach 130% by 2034, up from the current 98%. The primary fiscal deficit, not accounting for interest costs on the debt, is now 5% greater as a share of US GDP than during times of full employment. Goldman Sachs economists highlight the need for a fiscal surplus to stabilize the debt-to-GDP ratio, but note the lack of political momentum for deficit reduction.

#UsDebt #FiscalOutlook #DebttogdpRatio #InterestRates #TreasurySecretaryJanetYellen

https://theedgemalaysia.com/node/712717 

 'War economy' angle on debts risks 'creative' solutions: Mike Dolan
==========

The issue of debt sustainability is a concern in financial markets, particularly in the United States. The Congressional Budget Office projects a 17 percentage point jump in the U.S. public debt-to-GDP ratio over the next 10 years to 116% and then rising to 166% by 2054. Federal Reserve Chair Jerome Powell has stated that U.S. fiscal policy is on an 'unsustainable path'. The average interest cost on the U.S. public debt has more than doubled since April 2021 to 3.23%, the highest in 14 years. The persistence of brisk growth and above-target inflation is partly due to the demand stimulus created by unchecked deficits. The long-term debt projections are based on relatively modest expectations for borrowing costs, but the problem lies in the debt accumulated in the interim. The International Monetary Fund doesn't see the overall annual U.S. deficit back below 6% of GDP for the next five years. The justification for fiscal largesse has taken on a 'war economy' rationale, with heavy spending seen as necessary to address existential threats and geopolitical rivalry. French President Emmanuel Macron has also highlighted the risk of Europe's demise and called for an expansion of the European Central Bank's mandate. In conservative quarters, there are calls to erode central bank independence. The imperatives of fiscal retrenchment and electoral cycles may lead to a reliance on monetary policy to keep the economy stable.

#DebtSustainability #FiscalPolicy #PublicDebt #InterestRates #Inflation #MonetaryPolicy

https://theedgemalaysia.com/node/711780 

 Walmart to lay off hundreds of corporate staff and relocate others, WSJ reports
==========

Walmart is cutting hundreds of corporate jobs and asking most remote workers to move to offices. Workers at smaller offices in Dallas, Atlanta, and Toronto are being asked to move to other central hubs. Walmart will still allow staff to work remotely part time. Walmart employed approximately 2.1 million associates as of Jan. 31, 2024. The company has been shrinking its workforce and expects about 65% of its stores to be serviced by automation by the end of fiscal year 2026. In February 2023, it shut three U.S. technology hubs and asked workers to relocate. Walmart did not immediately respond to a request for comment.



https://theedgemalaysia.com/node/711450 

 Stocks near flat, dollar dips as focus shifts to US inflation data
==========

Global stock indexes were little changed on Monday while the U.S. dollar index eased as investors awaited this week's U.S. inflation data. U.S. consumer prices report and U.S. producer price data are expected this week, along with final reports on European inflation. Chinese retail sales and other data are also expected. Investors have been focused on inflation as they weigh how soon the U.S. central bank is likely to cut rates. Markets are pricing in around an 80% chance of a rate cut by the Fed's September meeting. Economists expect the closely watched core CPI to rise by 0.3% in the month, for an annual gain of 3.6%. The first-quarter U.S. earnings season is winding down, but investors will see reports this week from some big U.S. retailers including Walmart and Home Depot. China's finance ministry will start the sales of 1 trillion yuan of long-term treasury bonds this week. The dollar index eased 0.1% to 105.21. The yield on benchmark U.S. 10-year notes fell 1.6 basis points to 4.489%. Oil prices were higher amid signs of improving demand in the U.S. and China. U.S. crude rose 86 cents to settle at $79.12 a barrel, and Brent gained 57 cents to $83.36. Spot gold fell 1% to $2,336.76 per ounce.



https://theedgemalaysia.com/node/711423 

 Coach parent Tapestry cuts sales forecast on tepid demand in US, China
==========

Coach parent Tapestry cuts its annual sales forecast and misses third-quarter revenue estimates due to weak demand for its tote bags and accessories in North America and China. Reduced discretionary spending in North America and a fragile post-pandemic recovery in China have contributed to the decline in demand. Revenue in North America fell 3% in the quarter, while sales in Greater China dipped 2%. Despite the decline, Tapestry beat profit expectations due to margin growth, lower freight costs, and tighter expense control. Tapestry's buyout of Michael Kors owner Capri is being sued by the antitrust regulator. Tapestry expects fiscal 2024 revenue of over US$6.6 billion, down from previous expectations of about US$6.7 billion.



https://theedgemalaysia.com/node/711014 

 Key debt ratio resumes rise as global debt burden hits record US$315 tril, IIF says
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The global debt-to-output ratio rose to 333% as global debt hit a record high of US$315 trillion in Q1 2024. Debt in emerging markets grew to over US$105 trillion, with China, India, and Mexico being the largest contributors. Government budget deficits are projected to contribute around US$5.3 trillion to global debt accumulation this year. Interest rates have remained high, leading to higher borrowing costs and weakened currencies in many emerging markets. Egypt and Pakistan are expected to have the highest interest expense on government debt. The US and Japan saw the quickest rise in debt among developed economies. The US level of spending is a concern and out of line with long-term fiscal sustainability, according to the International Monetary Fund.

#GlobalDebt #DebttooutputRatio #EmergingMarkets #GovernmentBudgetDeficits #InterestRates #BorrowingCosts

https://theedgemalaysia.com/node/710680 

 Aramco to pay US$31 bil dividend as Saudi posts budget deficit
==========

Aramco will pay US$31 billion in dividends to the Saudi government and other investors despite lower profit. The payout, including a special component, is for the first quarter and will help fund the kingdom's spending plans as it looks to diversify the economy away from oil. Saudi Arabia needs oil at around US$108 a barrel to balance the budget, but benchmark crude prices are currently trading below US$84 a barrel. Aramco's massive dividend payouts come as the country's economy has contracted for three consecutive quarters and the budget has been in deficit for six consecutive quarters. Saudi Arabia has revived a plan for a follow-on offering of Aramco's shares, but global investors will keep an eye on the Saudi economy and oil output levels. The Organization of Petroleum Exporting Countries and its allies are expected to extend supply curbs into the second half of the year.

#Aramco #Dividend #SaudiArabia #BudgetDeficit #OilPrices #Economy

https://theedgemalaysia.com/node/710590 

 Soft US jobs raise selloff risk for stocks, BofA strategist says
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A weaker jobs report would be a stagflation signal, raising the odds of a selloff in stock markets, according to Bank of America Corp strategist Michael Hartnett. Recent US economic data has been stagflationary as it suggested slowing growth at a time of sticky inflation and labor costs. If the Labor Department’s report on Friday were to show the US added fewer than 125,000 jobs in April, and the average hourly earnings rose more than 0.4% from the previous month, that would be a “stagflation risk-off print,” he said. On the other hand, if payrolls were to rise by more than 225,000 and average hourly earnings by less than 0.2%, it would be interpreted as “Goldilocks back on and risk back on,” Hartnett wrote in a note. Forecasters expect the report, due at 8:30am in Washington DC, to show employers boosted payrolls by 240,000 in April. Average hourly earnings likely advanced 0.3% compared with the previous month. A rally in US stocks faltered last month as the Federal Reserve signaled it would hold interest rates higher for longer amid elevated inflation. A sharp slowdown in economic growth in the first quarter has also raised worries that the US was heading toward stagflation. Other market strategists, including at BofA, have downplayed those concerns. The bank’s head of US equity and quantitative strategy, Savita Subramanian, said on Thursday that a sturdy economy would sustain the bull-market run in US stocks. Hartnett, on the other hand, said stocks were in a “late secular bull market,” which ends either with a bubble or recession. Subramanian and Hartnett have often taken a contrarian stance on the outlook for equity markets. In March, they disagreed about artificial intelligence pushing technology stocks into bubble territory.

#UsJobs #StockMarket #Stagflation #BankOfAmerica #MichaelHartnett

https://theedgemalaysia.com/node/710265 

 China’s US Treasury holdings becoming ‘hostages,’ academic warns
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China needs to further reduce its Treasuries holdings to lessen potential leverage of Washington. China's vast American assets are hindering the safeguarding of national sovereignty. The US freezing of Russian assets following Moscow's invasion of Ukraine in 2022 is cited as an example of American actions that pose challenges for foreign investors. China's holdings of Treasuries have been trending down for several years, hitting the lowest level since 2009 last October. China is the second-largest foreign owner of Treasury securities. Di Dongsheng, vice-dean of Renmin University’s School of International Studies, argues that China no longer needs massive foreign reserves due to structural economic reforms at home. Di also views large dollar reserves as unnecessary in the event of upward pressure from the US currency against China's yuan.

#China #UsTreasuryHoldings #Leverage #NationalSovereignty #ForeignReserves #ExchangeRate

https://theedgemalaysia.com/node/709841 

 US ramps up help as countries plan response to China’s bullying
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Countries are seeking help from the US State Department to mitigate economic pressure from China. After Beijing tried to punish Lithuania for opening a liaison office with Taiwan, the US intervened and created a team to assist countries facing economic coercion. About a dozen nations have sought guidance on diversifying export markets away from China. The State Department team, known as 'the firm,' analyzes trade vulnerabilities, offers support, and conducts table-top exercises to game out responses to Beijing. The US government also leverages its economic power in foreign affairs, but faces challenges due to internal political divisions and a lack of an offensive trade agenda. China has not responded to allegations of economic coercion. In the case of Lithuania, China blocked trade, pressured multinationals, and canceled trade credits after Vilnius allowed a Taiwanese trade office to use the word 'Taiwan' in its name. The US provided trade credits, improved market access, and offered diplomatic support to Lithuania. Other nations are warned that economic dependence can become a weapon in the future.

#UsStateDepartment #China #EconomicCoercion #Trade #Lithuania

https://theedgemalaysia.com/node/709659 

 China firms go 'underground' on Russia payments as banks pull back
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Chinese companies are facing difficulties in shipping products to Russia due to China's big banks throttling payments for such transactions out of concern over US sanctions. Some Chinese exporters are turning to small banks on the border and underground financing channels, such as money brokers and even banned cryptocurrency, to settle payments. Chinese banks have intensified scrutiny of Russia-related transactions or halted business altogether to avoid being targeted by US sanctions. Major Chinese banks have suspended settlements from Russia since March, leading to drops in Russia-related business for some state-owned lenders. Chinese companies are experiencing delays in opening accounts at rural banks along the Russian border, causing bottlenecks in payment collection. Some Chinese exporters have given up on the Russian market due to the difficulties in collecting payments. The situation is posing a growing problem for small Chinese exporters.

#China #Russia #UsSanctions #ChineseBanks #Trade #SmallExporters

https://theedgemalaysia.com/node/709657 

 China firms go 'underground' on Russia payments as banks pull back
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Chinese companies are facing difficulties in shipping products to Russia due to China's big banks throttling payments for such transactions out of concern over US sanctions. Some Chinese exporters are turning to small banks on the border and underground financing channels, such as money brokers and even banned cryptocurrency, to settle payments. Chinese banks have intensified scrutiny of Russia-related transactions or halted business altogether to avoid being targeted by US sanctions. Major Chinese banks have suspended settlements from Russia since March, leading to drops in Russia-related business for some state-owned lenders. Chinese companies are experiencing delays in opening accounts at rural banks along the Russian border, causing bottlenecks in payment collection. Some Chinese exporters have given up on the Russian market due to the difficulties in collecting payments. The situation is posing a growing problem for small Chinese exporters.

#China #Russia #UsSanctions #ChineseBanks #Trade #SmallExporters

https://theedgemalaysia.com/node/709657 

 Elon Musk visits China as Tesla seeks self-driving technology rollout
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Tesla CEO Elon Musk arrived in Beijing on an unannounced visit to discuss the rollout of Full Self-Driving (FSD) software and permission to transfer data overseas. Musk met with Premier Li Qiang, who praised Tesla's development in China as a successful example of U.S.-China economic and trade cooperation. Tesla has not yet made FSD available in China, its second-largest market, but Musk stated that it may be available to customers in China 'very soon.' Musk is seeking approval to transfer data collected in China abroad to train algorithms for autonomous driving technologies. The surprise visit is seen as a major moment for Tesla, as rival Chinese automakers are rolling out similar software. Musk also met with Ren Hongbin, a government official who heads the China Council for the Promotion of International Trade. Tesla's Model Y and 3 cars were found to be compliant with China's data security requirements. Musk's visit comes after he canceled a planned visit to India due to Tesla obligations. Tesla shares have declined by almost a third since the start of the year.

#ElonMusk #Tesla #China #SelfdrivingTechnology #FullSelfdriving #Fsd #PremierLiQiang #DataTransfer #AutonomousDriving #ModelY #Model3

https://theedgemalaysia.com/node/709650 

 Apple intensifies talks with OpenAI for iPhone generative AI features
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Apple has renewed discussions with OpenAI about using the start-up’s technology to power new features on the iPhone. The two companies are discussing terms of a possible agreement and how the OpenAI features would be integrated into Apple’s iOS 18. Apple is also in discussions with Google about licensing its Gemini chatbot. The next iPhone operating system will include new features based on Apple’s in-house large language model and the company is seeking partners to power a chatbot-like feature similar to OpenAI’s ChatGPT. The discussions with OpenAI and Google come ahead of Apple’s Worldwide Developers Conference where it plans to introduce new AI software and services. Apple CEO Tim Cook has previously expressed interest in OpenAI’s ChatGPT and promised that new AI features would come to Apple’s platforms on a “very thoughtful basis”.

#Apple #Openai #Iphone #GenerativeAi #Ios18 #GeminiChatbot #Chatgpt #AiSoftware #WorldwideDevelopersConference #TimCook

https://theedgemalaysia.com/node/709585 

 Global manufacturing activity recovery to continue gradually into 2024, says S&P Global
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Global manufacturing activity recovery had seen a gradual improvement in late 2023 and is expected to continue into 2024. The US economy is stronger than expected, while Western Europe underperformed. Growth in Asia-Pacific was uneven, with India and Indonesia leading the region. Global PMI data showed gradual improvement, with new orders and future output rising. Asia-Pacific is expected to drive world growth in 2024, benefiting from recovery in China and resilient domestic demand. Malaysia's economic momentum will continue in 2024, with real GDP growth projected to accelerate to 4.6%. Manufacturing new orders have steadily increased since December 2023. The textile and apparel manufacturing segment is expected to slip. There is an upside risk to supply chain activities in 2024 if US importers anticipate tariff increases for imports from China. China remains a huge market for semiconductor suppliers, while the US accounted for 25% of revenues of the 10 largest chips companies.



https://theedgemalaysia.com/node/709537 

 Biden trails Trump in six of seven key states, poll shows
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US President Joe Biden is trailing Donald Trump in six out of seven key battleground states, according to a recent Bloomberg News/Morning Consult poll. Biden is ahead in Michigan by two percentage points but trails Trump slightly in Pennsylvania and Wisconsin, and has a larger deficit in Georgia, Arizona, Nevada, and North Carolina. The poll reflects a return to the previous state of the presidential race before Biden's strong State of the Union address in March. Respondents in the poll expressed pessimism about the economy, with a majority expecting worsening economic conditions in the coming months. Biden's deficit in the swing states is wider than that of Democratic congressional candidates, indicating a sour view of Biden among voters.

#UsPresidentialRace #JoeBiden #DonaldTrump #Poll #SwingStates #Economy

https://theedgemalaysia.com/node/709254 

 Biden trails Trump in six of seven key states, poll shows
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US President Joe Biden is trailing Donald Trump in six out of seven key battleground states, according to a recent Bloomberg News/Morning Consult poll. Biden is ahead in Michigan by two percentage points but trails Trump slightly in Pennsylvania and Wisconsin, and has a larger deficit in Georgia, Arizona, Nevada, and North Carolina. The poll reflects a return to the previous state of the presidential race before Biden's strong State of the Union address in March. Respondents in the poll expressed pessimism about the economy, with a majority expecting worsening economic conditions in the coming months. Biden's deficit in the swing states is wider than that of Democratic congressional candidates, indicating a sour view of Biden among voters.

#UsPresidentialRace #JoeBiden #DonaldTrump #Poll #SwingStates #Economy

https://theedgemalaysia.com/node/709254 

 Fisker may seek bankruptcy protection in 30 days if unable to meet debt obligations
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Fisker may have to file for bankruptcy protection within 30 days if it does not get adequate relief from its creditors and enough liquidity to meet its current debt obligations. The cash-strapped electric vehicle (EV) start-up failed to make an interest payment of about US$8.4 million on some notes due in 2026 during a 30-day grace period. Talks with a large automaker for a potential investment collapsed last month, leading to the need for in- or out-of-court restructurings and capital market transactions. Fisker's cash balance reduced to US$325.5 million in 2023 from US$736.5 million in 2022. The company plans to further reduce its workforce and streamline its operations. It had previously cut the prices of its 2023 Ocean sport utility vehicle models in March to boost sales and raise capital. Fisker has been facing intense competition and customers holding back purchases due to higher borrowing costs and economic uncertainty.

#Fisker #Bankruptcy #DebtObligations #ElectricVehicle #EvStartup

https://theedgemalaysia.com/node/709136 

 Fisker may seek bankruptcy protection in 30 days if unable to meet debt obligations
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Fisker may have to file for bankruptcy protection within 30 days if it does not get adequate relief from its creditors and enough liquidity to meet its current debt obligations. The cash-strapped electric vehicle (EV) start-up failed to make an interest payment of about US$8.4 million on some notes due in 2026 during a 30-day grace period. Talks with a large automaker for a potential investment collapsed last month, leading to the need for in- or out-of-court restructurings and capital market transactions. Fisker's cash balance reduced to US$325.5 million in 2023 from US$736.5 million in 2022. The company plans to further reduce its workforce and streamline its operations. It had previously cut the prices of its 2023 Ocean sport utility vehicle models in March to boost sales and raise capital. Fisker has been facing intense competition and customers holding back purchases due to higher borrowing costs and economic uncertainty.

#Fisker #Bankruptcy #DebtObligations #ElectricVehicle #EvStartup

https://theedgemalaysia.com/node/709136 

 China condemns US’ overcapacity claim just before Blinken visit
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China condemns US' claim of industrial overcapacity as economic coercion and bullying. Chinese diplomat accuses the US of seeking a more favorable competitive position and market advantage. The remarks come ahead of Secretary of State Antony Blinken's visit to China. Tensions between the two countries have been strained, with issues such as accusations of spying, tariffs on Chinese exports, a probe into China's shipbuilding sector, and efforts to force TikTok to divest from its Chinese parent. China expresses irritation and opposition to US interference in its internal affairs. Blinken's visit follows Treasury Secretary Janet Yellen's visit and the first phone call between China's new defense minister and his US counterpart. The US may impose sanctions on Chinese banks to curb Beijing's commercial support of Russia. China denies involvement in the Ukraine crisis and rejects being the scapegoat.

#China #Us #IndustrialOvercapacity #EconomicCoercion #AntonyBlinken

https://theedgemalaysia.com/node/709065 

 Euro at highest since 2008 on yen, markets nervous about Tokyo stepping in
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The yen hit fresh multi-year lows against the dollar and the euro on Tuesday, with the euro reaching its highest level since 2008 at ¥165.62. Investors are on heightened intervention watch ahead of the Bank of Japan's (BOJ) meeting this week. The dollar also rose to its highest level since 1990 against the yen, nearing the trigger level for intervention by Japanese authorities. Japanese Finance Minister Shunichi Suzuki has warned of the chance of intervention. However, doubts remain about whether Tokyo will act so close to the BOJ's policy meeting. The euro also gained against the dollar and the pound, while the pound dropped to a five-month low against the dollar. Investors are more confident in Bank of England rate cuts due to comments from policy makers about inflation slowing. The US Federal Reserve is seen as one of the last major central banks to cut rates. Investors are currently pricing in a 46% chance of the Fed's first rate cut starting in September. The strength of the US economy will be assessed this week with first-quarter GDP data and the PCE index, the Fed's preferred measure of inflation.

#Yen #Euro #Dollar #BankOfJapan #Intervention #BankOfEngland #FederalReserve #Inflation #Gdp #PceIndex

https://theedgemalaysia.com/node/709005 

 SERC: Escalated oil price boon and bane for Malaysia
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High crude oil prices caused by tension in the Middle East will boost Malaysia's oil and gas exports, but escalate fuel prices and dampen economic growth. The first order effect of higher oil prices will expand Malaysia's trade surplus. However, the second order effect of oil supply shocks will cause rising energy prices, inflation, and dampen consumer spending and investment demand. This will impact Malaysia's exports and result in higher equity risk and downward pressure on stock prices. RHB Investment Bank expects oil prices to reach as high as US$140 per barrel if the Israel-Iran conflict intensifies. The targeted fuel subsidy rationalization will not lead to complete floating of retail petrol prices, but rather a gradual adjustment. The impact of targeted fuel subsidies on headline inflation will be manageable, but there may be indirect impacts on other goods and services. Bank Negara Malaysia is not expected to raise interest rates to address the increase in inflation.

#OilPrice #Malaysia #EconomicGrowth #TradeSurplus #Inflation #ConsumerSpending #InvestmentDemand #StockMarket #FuelSubsidy #InterestRates

https://theedgemalaysia.com/node/708970 

 US business equipment borrowings fell 7% in March, ELFA says
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U.S. companies borrowed 7% less to finance equipment investments in March compared to a year ago, with new loans, leases, and lines of credit totaling $9.3 billion, up 18% sequentially. ELFA President and CEO Leigh Lytle expects equipment and software investment to pick up in the latter part of the year when the Fed begins its rate cuts. ELFA's credit approvals for U.S. companies in January came in at 77%, up from 76% the previous month. The Equipment Leasing & Finance Foundation reported a confidence index of 52.9 for April, indicating a positive business outlook.



https://theedgemalaysia.com/node/708938 

 US bond bulls lean into latest selloff despite inflation scare
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A sharp selloff in U.S. bonds prompts some investors to consider allocating more funds to lock in higher yields ahead of interest rate cuts by the Federal Reserve. Treasury yields have soared in recent weeks after solid economic data and rebounding price pressures pushed out expectations of rate cuts. Despite lower bond prices, investors see an opportunity to increase duration and benefit from potential interest rate moves. Some investors are rotating from cash to high-yielding fixed income products such as mortgages, credit, and emerging markets. Year-to-date returns on Treasuries have been negative, but investors remain optimistic about the duration trade. However, not all investors share the same view, with some expecting lower yields and a drop in allocations to bonds. Traders of futures tied to the Fed's policy rates expect less than two interest rate cuts in 2024. Confidence in easing price pressures is lower compared to the previous rally in bonds. It is considered too early to extend duration.

#UsBonds #Inflation #InterestRates #FederalReserve

https://theedgemalaysia.com/node/708937