The signs of economic slowdown in the US are starting to take hold while the US and China are in a battle the seems to never end – the Trade War. The initial claims for state unemployment benefits rose 3,000 to a seasonally adjusted 222,000 for the week of June 8, according to a report from the Labor Department. This number clearly is in line with recent job market releases that indicate weakness. The ongoing trade war will, as reported by many banks in the US and Europe, will have negative impact on China and the US – we now see this impact reaching several parts of the US. Note that in May US President Trump added fuel to the fire by increasing tariffs to 25% on $200 billion.
One key economic release was a Morgan Stanley Business Conditions Index that fell from 45 in May to 13 in June, the largest drop on recored. This is an example of the fear that has gripped the US economy. China reports are weak as well.
Note that the G20 meeting in Japan this month will be a chance for Trump to sit down face-to-face with Chinese President Xi Jinping in Osaka, a city about 40 minutes flight from Tokyo. While some are bracing for more tariffs, data so far have suggested a sharp slowdown in US economic growth in the second quarter. This article was sourced from CNBC, attributed to Reuters. According to the Atlanta Fed, it forecasts GDP to be 1.4% annualized rate in the April-June quarter, which is sharply down from the 3.1% pace in the first quarter. Also, over night there were more attacks on tankers in the Gulf of Oman, and the US is suggesting the Iran is behind these attacks. Iran remains defiant and continues its nuclear development program.
Eurosceptic former Foreign Secretary Boris Johnson who launched his campaign with a a promise to take Britain out of the EU by October 31 with or without a deal, took down the most votes with 114 in the first round for the PM elections, while Jeremy Hunt came in second with 43 votes. The Swiss National Bank has kept ultra low rates to counter the US – China Trade War, as tensions forced the Swiss Franc to strength as it is a safe haven currency. Investors buy the US, Swiss Franc and Japanese Yen when geopolitical unrest strikes.