Egypt and the IMF prepare for Palestinian Refugees

As Palestinians and their economy continue to suffer from genocide, Egypt is working in collaboration with the International Monetary Fund to ensure Egypt will be prepared for the influx of refugees.  While Israel is committing their bombing campaign of Palestine, international trade and the economic prosperity in the Middle East is negatively impacted.  The IMF has decreased their expected GDP growth in the Middle East and North Africa for 2024 from 3.4 to 2.9 in addition to decreasing Egypt's growth outlook from 3.6% to 3.0%.  

In recent years, the IMF has worked closely with Egypt to make policy changes to promote their economy.  Although still in conversation for new policy, economic reform programs, and loans: Egypt previously received a $3 billion loan that is near completion.  In response to the positive effects of this loan, the IMF intends to assist Egypt further. The IMF is monitoring the recent impacts of Israel's war on Palestine on the Suez Canal trade routes and surrounding economies.  

I believe that the IMF is making the right move.  Rather than allowing an influx of refugees to backtrack the recent progress of the Egyptian economy, they are working proactively to assist Egypt and create a plan to take advantage of their changing economic landscape.

https://www.middleeastmonitor.com/20240223-imf-seeks-to-boost-egypt-ahead-of-possible-entry-of-gaza-refugees//

https://www.reuters.com/world/africa/imf-egypt-agree-main-policy-elements-economic-reform-programme-2024-02-02/

Inflation remains sticky in Europe, with core prices cooling less than expected

The inflation in the 20-nation euro zone was down to 2.6% in February, however this was higher than the expectation of 2.5%. Core inflation (removing energy, food, alcohol, and tobacco) was also reported at 3.1%, that is 0.2% above the expected value of 2.9%. This report comes off a value of 2.8% for inflation in January, indicating further cooling has occurred. In addition to lower inflation, energy prices continue to fall with a deflation rate of -3.7% in February. 

The new expectation is that interest rates will begin to come down in June due to the recent inflation figures, however officials say they need more evidence of stable prices to begin bringing interest rates down. The ECB also has to consider the near recession of the past year where they saw flat GDP growth in the final quarter of 2023. It seems we could see interest rates lowered in the summer as inflation moves towards the 2% goal, even though core inflation is holding over 3%.

Source - https://www.cnbc.com/2024/03/01/euro-zone-inflation-q1-2024.html

Jacob Rothschild, Financier and Philanthropist, Dies at 87

 

Jacob Rothschild, a renowned financier and philanthropist passed away Monday at 87. Jacob was known for breaking with his families fabled banking dynasty at a time of radical change in the world of high finance. 

For most of the 19th century, the House of Rothschild was the largest bank in the world, by a large margin. Most of the Rothschild's wealth trace back to a decision to finance the British military in the Napoleonic Wars, but Jacob had a plan to break away. Jacob long favored merging the London branch of his families financial empire with another merchant bank, S.G Warburg, but the plan was heavily opposed by his cousin and own father. That opposition was the decision to try and break away, with Jacob famously saying "We must try to make ourselves as much a bank of brains as of money."

The dispute was resolved in 1980, when the feuding partners agreed that the family bank (N.M Rothschild & Sons Ltd) would operate separately from Jacob's breakaway entity (J. Rothschild & Company). Jacob would end up retiring in 2019, with an estimated wealth of 2019. 

Jacob leaves behind a legendary scholar career, earning his degree from Oxford University, as well a wide network of international connections. He was a member of the International Advisory Board of the Blackstone Group, a leading private equity group.

Mortgage Rates Edge Closer to 7%, Dampening Start of Spring Homebuying Season

 In October of 2023, mortgage rates reached a 20-year high of 7.79%, and were slowly decreasing until recently. As of February 29th, the 30-year fixed mortgage rate averaged 6.94%, an increase from 6.90% the previous week.  In the past few months, the market has been reacting to the fact that the Federal Reserve will not cut mortgage rates until later in the year, resulting in a trend of upward mortgage rates. The rise in interest rates has hindered the upward momentum of homebuyers and raises concerns as spring is the busiest season for home buying. Higher than anticipated inflation and an insufficient volume of existing homes have caused it difficult for many new homeowners to get into the market. As a result, the average mortgage application has dropped by 5.6% from the week before and in comparison to last year, mortgage applications have dropped by 12%. Although the current job market is solid, consumers are showing extra sensitivity to changes in mortgage rates which are impacting the current rate of homes being sold. 

https://apple.news/A5auBGMyjTgqZYmvMh2DZdQ

Boeing agrees to $51M settlement for US export violations, including in China

Boeing (BA) has reached a settlement with the U.S. State department for $51 million due to multiple export violations, including Chinese employees in China improperly downloading documents related to U.S Defense Department programs. The violations occurred from 2013-2017, involving date of programs like the F-18, F-15, and F-22 fighter jets, the E-3 airborne warning and control system, the AH-64 apache helicopter and the AGM84E cruise missile. Unauthorized downloads also took place in 18 other countries between 2013-2018 at Boeing and partner facilities, including the likes of Australia, Russia, the UK, India, and Hong Kong. 

The settlement resolves 199 violations of the Arms Export Control Act and International Traffic in Arms Regulations. Boeing, which disclosed the violations voluntarily, will have to implement remedial compliance measures and engage an external special compliance officer for at least 2 years. The settlement included a $51M civil penalty with $24M suspended for compliance program improvements. 

The State Department said the settlement "highlights the importance of exporting defense articles only pursuant to appropriate authorization" and followed "an extensive compliance review" by the government.

Source: https://www.reuters.com/business/aerospace-defense/boeing-pay-51-million-settlement-us-export-violations-2024-02-29/

Google hit with $2.3 billion lawsuit by Axel Springer, other media groups

 Link: https://finance.yahoo.com/news/google-hit-2-3-billion-150534366.html

Recently Google has been hit by a 2.1-billion-euro ($2.3 billion) lawsuit started by 32 media groups over Google's digital advertising practices. The timing of the lawsuit comes when European regulators are already engaged in a lawsuit with Google over the same digital advertising practices the private lawsuit aims to end. This timing is convenient as it just piles more on Google's plate in an attempt to get them to change their policy on digital advertising. Google claims their policies are fair, and they participates in both the buy and sell side of the market, but European regulators and private media groups disagree. The public lawsuit is an example of a shifting attitude towards tech giants, as the European Union has already lobbied two big lawsuits against Apple, causing them to change their standard charging port and messaging system. Hopefully, regulators continue this trend and keep big tech firms from overgrowing into sectors they shouldn't have a hand in.

 

Retail sales tumbled 0.8% in January, much more than expected

Consumer spending fell sharply in January, with retail sales dropping 0.8% despite expectations of a 0.3% decrease. Excluding auto sales, the decline was 0.6%, well below the anticipated 0.2% gain. Weakness was seen in building materials, garden stores, and miscellaneous stores, while restaurants and bars saw a 0.7% increase. The report, not adjusted for inflation, showed a 0.6% year-over-year increase in sales, raising concerns about the impact of high inflation on future spending. However, the strong labor market and improving manufacturing sector suggest a resilient economy. The Fed is expected to hold rates, but futures indicate possible rate reductions starting in June, with four cuts expected by the end of 2024.

link - https://www.cnbc.com/2024/02/15/retail-sales-january-2024-.html

housing prices and inflation

Overall inflation is going down, but housing costs are stubbornly high. This is a problem for the Fed because housing is a big expense for most people and affects the overall inflation rate.

Mark Franceski managing director of the housing research company Zelman & Associates, stated that "if you want to know where inflation is going, you need to know where housing inflation is going."

Experts expected housing inflation to slow down based on data from other sources, but that hasn't happened yet. This is surprising because it makes housing less affordable for buyers and even though existing homeowners are somewhat protected by fixed-rate mortgages.

The reason the data is different is because inflation data uses rent prices, not home prices or mortgage rates. While private data shows rent going down, it hasn't shown up in the government's data yet, creating a confusing situation for the Fed. The pandemic may also have muddled the measurement of home prices in inflation data. 

https://www.nytimes.com/2024/02/26/business/economy/housing-inflation-fed.html 

Jeff Bezos, Jamie Dimon, and Mark Zuckerberg have sold stock worth about $9 billion. They might think markets can't go much higher.

         As of recent there has been a mass selling of shares from large corporations namely, Jeff Bezos, Mark Zuckerberg, and Jamie Dimon from JPMorgan. Bezos offloaded over 50 million shares worth 8.5 billion of Amazon in only nine days. Zuckerberg sold almost 1.8 million shares for more than 400 million this last month. And Dimon cashed in 822,000 shares at about 150 million in total.

    This could be pointing to several things including just basic economic standpoints such as just an occasional sale since it was already announced in trading plans, months in advance, that they were going to do this. They could have also lined up shares because their stocks were ballooning in value. It could have also been disposable stock which could have been put in place for tax reasons, etc.

    Conversely, this could also signal a gradual decline in confidence in the economy, though marginal compared to their actual wealth holding. Notably, they hadn't been buying shares which means their shares could be fully valued, and its time to take some off the table.

https://www.businessinsider.com/bezos-dimon-zuckerberg-amazon-jpmorgan-meta-stock-sales-billionaires-wealth-2024-2

DraftKings posts 44% revenue growth and narrowing losses, but falls short of estimates

 DraftKings is a sports betting app that saw huge revenue growth but still fell short of what they were estimated.  The company reported 44% growth and claimed that they fell short to do unfavorable outcomes in some NFL games. The CEO said that is the worst stretch in outcomes that they have seen since becoming a public company. Another positive for the company is that they also saw a 37% increase in unique players. Even with all of this growth, it is interesting that their share price actually fell 10 cents. This being said, it is incredible how high the expectations were for this company, and even though they fell short of expectations, this amount of growth is nothing to shake a stick at 

M2 Supply is Shrinking in the US

    The money supply in the US is measured by two variables. M1, which is all of the dollar notes that are on hand within the US economy and M2 which is M1 plus all of the dollar notes that are held in more long term account types. M1 is usually open to fluctuations that match certain economic conditions while M2 is typically increasing as time goes on. However, M2 has recently been observed to be decreasing. Now, in past economic recessions and the Great depression, the M2 supply had dropped more than 2% points. That is the exact point where the M2 supply is currently. While this shows a strong historical record of predicting a oncoming recession, it is unlikely to insinuate a recession in the modern day. This is because while M2 is shrinking, most people don't rely on M1 type currency which played a heavy role in all of those past recessions.  

Source: https://finance.yahoo.com/news/u-money-supply-shrinking-most-105000864.html