Here we go again with the stories.
On Thursday afternoon, US equities were purportedly nervous about Joe Biden’s fiscal ambitions, specifically the retroactive application of a steeper capital gains tax for high-income filers. By Friday morning, Biden’s federal spending plans were credited with “spurring a Wall Street rally.” Whatever fits the price action.
European stocks touched a record high headed into the weekend. The European Commission’s sentiment index jumped to 114.5 (figure below), up from 110.5 in April and better than the 112.3 the market expected.
Gauges for services, retail, industry and construction all rose. European businesses are looking ahead to brighter days after the bloc suffered a double-dip recession in the first quarter amid a fraught vaccine rollout and rolling lockdowns.
“Barring a few months in 2000, December 2017 and January 2018, Eurozone economic sentiment has not been as high as it is now, even if we go all the way back to 1985,” ING’s Bert Colijn remarked. “Although downside risks to the eurozone economy remain significant, they have been falling given that the vaccination programs are picking up and COVID-19 cases are coming down rapidly.”
On a more somber note, Japan extended a virus emergency for Tokyo to June 20. On Friday, Governor Yuriko Koike told the media that another delay in the Olympics would be “difficult.”
Staying in Japan, Haruhiko Kuroda delivered a candid assessment of Bitcoin. “Most of the trading is speculative and volatility is extraordinarily high,” he said, in an interview with Bloomberg. “It’s barely used as a means of settlement.” We’re told Bitcoin has “stabilized” near $35,000.
Forgive me, but “stable” (or any derivation thereof) is always a misnomer when it comes to Bitcoin. It’s been a rough month (figure above).
Meanwhile, the BOE’s Andy Haldane said it’s time to think about pulling back on stimulus. “An atypically sharp recession will be followed by an atypically sharp recovery [and] that means we shouldn’t be expecting the same policy playbook as we did after the global financial crisis,” he mused, during remarks for an interview with the Centre for the Study of Financial Innovation.
“As policymakers, we should be more ready to withdraw our stimulus,” he added, cautioning that if accommodation is maintained for too long, “it does carry some risk of over-egging this particular pudding.” He meant that demand could outstrip supply, pushing up prices.
Speaking of “over-egged pudding,” global stocks were headed for a fourth monthly gain (figure below) and a sixth in seven.
And with that, I’ll leave you with some additional egg-related inflation commentary from Bloomberg’s “Supply Line” newsletter (below).
Producers like Larry Brown and his peers are moving into making eggs from a special type of sustainable farm that can be trumpeted as being better for the planet.
These eggs, which are making their debut now on shelves for as much as $8 a dozen, are still labeled organic and animal-friendly, but they’re also from birds that live on farms using regenerative agriculture — special techniques to cultivate rich soils that can trap greenhouse gases. Such eggs could be marketed as helping to fight climate change.
Those eggs are noticeably tastier than the usual, and their bright orange yolks might be a sign of healthier hens.