May 31 – June 6, 2025
Big news. The fantastic quarrel between Elon Musk and Trump, which cost Musk quite large losses in the capitalization of his companies. I will not describe the details, it is not very interesting from the point of view of macroeconomics, but such consequences of a political scandal show how difficult the financial markets are today.
From our point of view, this situation means that quite a lot of companies and financial structures are fundamentally dependent on budgetary or near-budgetary revenues, and their cessation could simply blow up the markets.
Macroeconomics. South Korea’s GDP -0.2% per quarter:
Рис. 4
Why did the annual growth rate drop to zero for the first time in 14 years of data collection (excluding Covid, of course):
Рис. 5
Mexico’s fixed investment -0.2% per year, 7th straight negative:
Рис. 6
German industrial production -1.8% per year, 23rd consecutive negative:
Рис. 7
China’s official manufacturing PMI (49.5) edged up from its 16-month low (49.0) but remained in stagnation:
Рис. 8
As is the case for other industries (50.3):
Рис. 9
Much more pessimistic is the independent review (48.3 – a 3-year low):
Рис. 10
South Africa’s PMI (43.1) is at its lowest since the Covid anti-records of 2020:
Рис. 11
Germany’s services PMI is 47.1. This is a 30-month low, and excluding the Covid dips of 2020/22, a 16-year low:
US Non-Manufacturing PMI unexpectedly returns to stagnation zone (49.9):
Рис. 13
New orders in the recession area (46.4), after 2009 they were lower only during Covid and in December 2022:
Рис. 14
And the input price component is at its highest level in 2.5 years:
Рис. 15
This is an argument in Powell’s favor in the debate about whether to raise or lower the interest rate.
Japan’s leading indicator index unexpectedly hits its lowest since the Covid era:
Рис. 16
France’s current account deficit hits 26-month high:
Рис. 17
US private sector employment grew at its slowest pace in more than 2 years and was three times weaker than expected:
Рис. 18
US initial jobless claims hit 8-month high:
Рис. 19
US unemployment remains at an 8-year high (excluding the Covid surge, of course):
Рис. 20
And in Canada it reached its peak in 9 years:
Рис. 21
The US labor force participation rate has retraced its 10-year low (not counting Covid), which is the lowest since 1977:
Рис. 22
Please note that US labor statistics have always been distorted towards improvement. If they have improved now, what does reality look like?
The ECB cut the rate by 0.25% to 2.15%; GDP and inflation forecasts were reduced; however, judging by the statements of the head of the Central Bank Lagarde, a pause in monetary easing is likely in the near future.
The Central Bank of India cut the base rate by 0.5% to 5.5% (a decrease of only 0.25% was expected).
The Central Bank of Canada left the rate unchanged (analysts’ forecasts were divided between maintaining it and reducing it).
Main conclusions. As we can see, expert assessments of everything and everyone are extremely negative. Well, and an additional picture, the silver price chart, it broke through last year’s peak and ended up at the levels of early 2012:
Рис. 23
Уровень просрочки по коммерческим ипотечным ценным бумагам США (CMBS) для офисов вырос до 10,3% в апреле, что близко к самому высокому уровню за всю историю. Он вырос на 9 процентных пунктов за последние 3 года и достиг 10,7%, самого высокого показателя с 2008 года.
The multifamily delinquency rate rose 113 basis points in April to 6.57%, the highest since 2015. The overall U.S. CMBS delinquency rate rose to 7.03%, the highest since January 2021.
Speaking about housing, the gap between those wishing to sell and those wishing to buy has grown sharply. The gap has reached a colossal level and also points to approaching cataclysms and a decline in the standard of living of the population.
And finally, the so-called “Buffett index”:
“The Buffett Index” is the ratio of the total capitalization of the US stock market to the country’s GDP. Buffett himself considers it one of the best indicators of market overbought. When the indicator exceeds 100%, the market is considered overvalued. Now it is almost twice (198) higher than normal, which may indicate overheating and a potential risk of collapse.
In general, we note that the probability of a serious financial collapse is growing significantly. Nevertheless, summer has come and we wish all our readers to enjoy its manifestations both on weekends and on weekdays!