What’s Happening – Libero Quotidiano


Sandro Iacometti

Euro, oil, inflation and stock exchanges. Today may clear skies return and we can breathe a sigh of relief. But it is hard to ignore what happened yesterday. The signals from the markets that seem to sense the impending disaster are too many and too strong. The first warning was given by the direction of the European currency, which started to decline since the beginning of the session, and then closed at $1,024, down by 1.72%. To get an idea of ​​what this means, just consider that this is a level we haven’t seen since the end of 2002 and that the daily drop is the largest since the start of 2020 and the start of the COVID-19 pandemic.

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Negative records come after a series of declines that marked all the first months of the year, with an overall decline of about 9.8%. Investors fear recessionary winds are blowing in Europe, with a steady rise in gas and electricity that will keep inflation at high levels for a long time, prompting safe-haven dollar purchases. German Economy Minister Robert Habeck admitted that the “fear” of a slowdown “in the near future is too great”.

central banks
Not that they are better off in the United States. Everyone is betting that the US central bank will continue to raise interest rates, reining in the economy, in a more aggressive way to fight high prices that don’t seem to want to back down. In May, according to the Organization for Economic Co-operation and Development, the inflation trend in the region increased from 9.2% in April to 9.6%. The index rose in all countries except Colombia, Japan, Luxembourg and the Netherlands.

Hence the market belief that the recession would spread far beyond the old continent. The prospect of a global collapse in demand and production activity immediately rebounded on oil prices. Also thanks to the forecasts of Citrigroup analysts, according to which a reversal in the economy could lead to a drop in the price of a barrel to $65 or more. It is an expectation that has led to a flurry of forward sales that have added to those already in place. The result: the barrel of Texas oil collapsed 9%, falling below $100 ($98.56), and worse, Brent, which fell 10.11% to $102.04.

The currency and commodity storm overwhelmed all stock exchanges. Those from the ancient continent closed the session with powerful blows. Piazza Affari which saw the Ftse Mib leave 2.99% on the ground at 20705.06 points and All Share in the red by 2.91% at 22681.71 points. Frankfurt is also down (Dax -2.91%), and today’s June Fed minutes are expected, although traders are already preparing for a 75bp rate hike at the end of the month. The Dow is down 1.84% early in the session, the S&P 500 is down 1.57% and the Nasdaq is down 0.38%. As the markets turn upside down due to the risks of a global recession, we have started to do the first calculations for inflation. Disposable income of households in the first quarter of the year, according to data released yesterday by Istat, rose 2.6% compared to the previous quarter.

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However, due to the general increase in prices, the purchasing power of households increased by only +0.3%. While households’ propensity to save was 12.6%, an increase of 1.1 percentage points, versus weaker growth in final consumer spending compared to disposable income. In short, Istat’s numbers underscore the difficulties families are having in making ends meet, with the cost of living rising after all potential increases have eaten up. The one thing that never goes down is taxes. The tax burden in the first quarter was 38.4%, an increase of 0.5 percentage points over the same period of the previous year. While state revenue in the first five months of the year grew by 10.9%, with an increase in revenue that exceeded 18 billion. London (FTSE 100-2.86%), Paris (40 -2.68%), Madrid (IBEX 35 -2.48%). Wall Street is also negative, unable to lift its head after the long Independence Day weekend.

Wall Street
Minutes from the Federal Reserve’s June meeting await, although traders are already preparing for a new rate hike of 75 basis points later this month. The Dow is down in the first phase of the session by 1.84%, the S&P 500 is down 1.57% and the Nasdaq is down 0.38%. As the markets turn upside down due to the risks of a global recession, we have started to do the first calculations for inflation.

Disposable income of households in the first quarter of the year, according to data released yesterday by Istat, rose 2.6% compared to the previous quarter. However, due to the general increase in prices, the purchasing power of households increased by only +0.3%. While households’ propensity to save was 12.6%, an increase of 1.1 percentage points, versus weaker growth in final consumer spending compared to disposable income. In short, Istat’s numbers underscore the difficulties families are having in making ends meet, with the cost of living rising after all potential increases have eaten up.

The one thing that never goes down is taxes. The tax burden in the first quarter was 38.4%, an increase of 0.5 percentage points over the same period of the previous year. While state revenue in the first five months of the year grew by 10.9%, with an increase in revenue that exceeded 18 billion.

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