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European markets’ best run in two years; UK jobless rate falls; US retail sales disappoint – as it happened

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European stock markets have racked up their longest winning streak since April 2019, as optimism over the economic recovery continues to lift shares.

London's market also saw gains, with the FTSE 100 finishing at its highest close in almost 16 months. But shares in mining companies, and property companies dipped.

The pound nudged a one-month low, after the ending of lockdown restrictions was postponed by a month. Oil also pushed higher, with Brent crude hitting £74 per barrel tonight, the first time in over two years.

But investor Michael Burry gave the markets something to ponder - tweeting that we're in the biggest speculative bubble ever.

Cassandra (@michaeljburry)

People always ask me what is going on in the markets.

It is simple. Greatest Speculative Bubble of All Time in All Things. By two orders of magnitude. #FlyingPigs360

June 15, 2021

The day began with the UK's jobless rate dropping to its lowest since last summer, at 4.7%.

The number of people joining company payrolls surged by almost 200,000, as firms took on more staff to handle rising demand following the easing of lockdown rules this spring. Vacancies jumped to their highest since the pandemic, while redundancies also returned to more normal levels. But experts warned that long-term unemployment was rising, including among younger people.

A volley of US economic data painted a mixed picture, with retail sales falling faster than expected in May.

Economist cited supply chain problems, rising prices, and the move towards spending money on services rather than 'stuff' as lockdowns eased.

Confidence among homebuilders fell, as rising prices made new homes less affordable, while producer prices surged as manufacturers and service sector providers hiked prices. On the upside, US industrial production rose -- lifted by a jump in car production. And the UK and Australia agreed the broad sweep of a new trade deal....but its impact on households will be meagre.

As my colleague Richard Partington explains:

Tariffs will be cut on Australian products such as Jacob's Creek and Hardys wines, as well as on beef, lamb, swimwear and confectionary.

However, by the government's own admission, the savings add up to GBP34m a year - little more than a pound each per household. Scotch whisky, biscuits and ceramics will be cheaper to sell into Australia, aiming to help UK industries that employ 3.5 million people. Still, the government admits that its deal will only boost UK GDP by up to 0.02% after 15 years, barely a rounding error for a GBP2tn economy.

Farmers, though, fear a surge of Australian meat that will undermine their businesses.

Peter Walker (@peterwalker99)

On the Australia-UK trade deal, Labour argue the tariff-free quotas for meat imports are so high the 15-year protective period for UK farmers is essentially pointless.

Initial limit for beef imports: 35,000 tonnes. *Total* imports in 2019: 1,766 tonnes.

June 15, 2021

Bank of England Governor Andrew Bailey has warned fintech firms to expect some 'tough love', reiterating the need for stablecoins to be fully backed by assets. The UK's competition watchdog announced a review of Apple and Google's mobile ecosystems, over concerns that their dominance is hurting consumers.

Stocks are slightly lower on Wall Street, ahead of tomorrow's Federal Reserve meeting. The Dow and the S&P 500 are down around 0.15%, with the Nasdaq Composite off 0.65%.

Here are more of today's stories:

Goodnight. GW

Updated at 7.41pm BST

Burry: It's the greatest speculative bubble of all time...

Investor Michael Burry -- most famous for his role in The Big Short -- has warned that the markets are currently in the greatest speculative bubble ever.

Burry returned to Twitter this week for the first time since February, and tweeted a new warning about rampant speculation, saying:

"People always ask me what is going on in the markets.

It is simple. Greatest Speculative Bubble of All Time in All Things. By two orders of magnitude. #FlyingPigs360."

Cassandra (@michaeljburry)

People always ask me what is going on in the markets.

It is simple. Greatest Speculative Bubble of All Time in All Things. By two orders of magnitude. #FlyingPigs360

June 15, 2021

Business Insider explains what the 'flying pigs' reference means....

The hashtag was likely a reference to a famous saying in investing: "Bulls make money, bears make money, but pigs get slaughtered." Burry has repeatedly told investors that they're being too greedy, speculating wildly, shouldering too much risk, and chasing unrealistic returns.

The Scion Asset Management chief deleted his Twitter profile in early April after sounding the alarm on Tesla stock - which he's short - as well as GameStop, bitcoin, dogecoin, Robinhood, SPACs, inflation, and the broader stock market. He resumed tweeting on Monday.

European stock markets post longest winning streak in two years

Europe's stock markets have racked up their longest run of gains since April 2019 - by a whisker.

The Stoxx 600 index of European shares has closed half a point higher at 458.81 points, up just 0.11%. That's its eighth daily gain in a row, the best run since mid-April 2019, and a record closing high.

The Stoxx 600 over the last two years

The Stoxx 600 has surged by 15% so far this year, extending its recovery from last spring's crash, as the vaccine rollout has boosted confidence that Europe's economy will recover.

The European Central Bank's PEPP bond-buying programme, and massive fiscal spending from the US, has also supported the markets, with investors confident that stimulus won't end soon.

FTSE 100 closes at near 16-month high

Back in the City, the FTSE 100 has ended the day at its highest close since the pandemic hit Europe in late February 2020.

The blue-chip index finished today's session nearly 26 points higher at 7172 points.

That's its highest close since 21 February 2020, just before parts of Lombardy went into lockdown, triggering turmoil in global markets.

The FTSE 100 earlier hit a new near-16 month intraday high of 7189 points, the highest since markets started to tumble in the last week of February 2020. As this chart shows, the FTSE 100 hasn't recovered all its pandemic losses - unlike the US stock market, or Germany's DAX - but it's getting closer:

The FTSE 100 over the last two years

AB Foods (+3.3%), which owns discount clothing chain Primark, was the top riser, followed by telecoms group BT (+2.9%).

Royal Dutch Shell (+2.3%) added to yesterday's gains, as oil continued to climb. Multinationals benefitted from the weaker pound, with engineering firm Spirax-Sarco (+2%), chemicals group Johnson Matthey (+2%) and tobacco firm BAT (+1.8%) in the risers.

But... the more UK-focused FTSE 250 index fell by 0.5%.

Fallers included commercial property firm Hammerson (-6.5%), whose shopping centre tenants will be hurt by the delay to ending lockdown, and holiday operator TUI (-3.4%), as hopes of a holiday getaway this summer faded for some families.

Oil prices pushed higher today as traders anticipated stronger demand as the global economy recovers, and the prospect of an imminent increase in supply from Iran faded.

Brent crude traded as high at £73.90 per barrel, the highest since April 2019. US crude hit its highest since October 2018, touching £72 per barrel.

UBS analyst Giovanni Staunovo said demand for oil was likely to outstrip supply in the short term:

"With supply growth lagging demand growth in the near term, faster falling oil inventories are supporting oil prices,"

Ricardo Evangelista, senior analyst at ActivTrades, said traders were watching the ongoing negotiations between Washington and Tehran:

The markets have been looking with interest at the ongoing negotiations between the US and Iran, with the objective of reviving the nuclear agreement between the two countries, which could also mean the end of restrictions on Iranian oil sales. However, early losses in the price of crude were swiftly reversed following indirect negotiations between the two countries that have so far failed to bear any fruits, with observers considering that an agreement is far from imminent.

Crude Oil Today (@WtiOil)


Today's Crude Oil Prices:
? WTI: £71.77 (+0.87)
? Brent: £73.62 (+0.76) #supply #crudeoil #oilexploration

June 15, 2021

Ryanair boss: airlines must fly over rogue states despite Belarus 'hijacking'

Gwyn Topham

Airlines must remain free to fly over rogue states despite the "state-sponsored hijacking" of a plane by Belarus, according to the boss of Ryanair, as he told MPs of the "hostile and threatening" actions towards the flight crew in Minsk.

The captain and five crew of Ryanair flight FR4978 from Athens to Vilnius were put under armed guard in Minsk after diverting the plane for a fake bomb threat - apparently staged to allow the Belarus government to capture an opposition journalist among the 126 passengers.

Roman Protasevich and his girlfriend Sofia Sapega were arrested on landing. The Ryanair chief executive, Michael O'Leary, said the crew were pressured to provide filmed statements saying that they had diverted voluntarily, although Minsk air traffic control had told the captain that a bomb would be detonated if the plane continued to its original destination in Lithuania.

The ATC also falsely claimed to have tried to contact Ryanair's operations base, leaving the captain with no option but to heed their advice, O'Leary said.

O'Leary told the Commons transport select committee on Tuesday that the captain was:

"repeatedly seeking an open line of communication to Ryanair's operations control centre in Warsaw, various excuses came back from Minsk on why they couldn't reach us, Ryanair weren't answering the phone, all of which was completely untrue".

He said the pilot's only means of communications was through Minsk, which "confirmed it was a red alert".

Upon landing, unidentified persons boarded the aircraft carrying video cameras, O'Leary said, to "repeatedly attempt to get the crew to confirm on video that they had voluntarily diverted.

"The crew were put under significant pressure, taken under armed guard and held for a number of hours. The captain was accompanied by an armed guard ...

It was a very hostile and threatening environment."

Here's the full story:

In something of a financial morality tale, the EU has excluded 10 of the heaviest-hitting banks in the debt market from running lucrative bond sales as part of its EUR800bn recovery fund.

Why? Because historic breaches of antitrust rules - such as manipulating currency markets or taking part in a bond trading cartel - mean they have blotted their copybook with the Commission. So while these issues took place some time ago, and have been settled, these banks will miss out on some juicy fees if they're not seen as 'fit' to handle the work.

The FT has the story:

Brussels' biggest ever borrowing spree kicks off on Tuesday with the sale of a new 10-year bond to fund the NextGenerationEU programme under a so-called syndication, where a group of banks is paid to drum up demand from investors.

But 10, including big players such as JPMorgan, Citigroup, Bank of America and Barclays, have been told they cannot take part in these deals due to previous involvement in market-rigging scandals, according to people familiar with the matter.

Banks found to have breached EU competition rules "will not be invited to tender for individual syndicated transactions", said a spokesman for the European Commission, which handles debt issuance on behalf of the EU.

"The Commission implements a strict approach to ensuring that the entities with whom it works are fit to be a counterparty of the EU."

Banks found guilty of antitrust breaches will be required to show they have taken "remedial measures" to prevent them happening again before they will be allowed to bid for syndications, the spokesman added.

Tommy Stubbington (@TomStub)

EU freezes 10 banks out of bond sales over antitrust breaches via @financialtimes

June 15, 2021

US homebuilder confidence knocked by rising costs

More US data on the wires.. and this time, confidence among American homebuilders has fallen to a 10-month low.

Sentiment was knocked by rising costs and supply shortages, which may show the US housing market is cooling after a surge in prices in the last year. Here's the details, via CNBC.

  • Homebuilder sentiment dropped 2 points to 81 on the NAHB's monthly index, down from a recent record peak of 90 last November.
  • "Higher costs and declining availability for softwood lumber and other building materials pushed down builder sentiment in June," said NAHB Chairman Chuck Fowke.
  • Builder sentiment rose in the West but fell in all other regions, most sharply in the Northeast, but overall sentiment remains high in historical terms.

NAHB chairman Chuck Fowke, a homebuilder from Tampa, Florida, said rising costs were making houses less affordable:

"Higher costs and declining availability for softwood lumber and other building materials pushed down builder sentiment in June,"

"These higher costs have moved some new homes beyond the budget of prospective buyers, which has slowed the strong pace of home building."

Liz Ann Sonders (@LizAnnSonders)

Unexpected downtick for June ?@NAHBhome? Homebuilder Confidence, to 81 vs.

83 est./prior month; present & future single family sales fell, along with prospective buyers traffic ... unavoidable increases for new home prices continuing to push buyers to sidelines

June 15, 2021 CNBC (@CNBC)

Homebuilder sentiment drops to 10-month low, as construction costs drive prices higher

June 15, 2021

Lumber prices, incidentally, have been falling steadily in the futures market since soaring dramatically earlier this year. With prices so steep, some people have been putting off new projects, while the temporary surge in demand that pushed prices up is fading.....

Dominic Chu (@TheDomino)

Yeah...I'd say Lumber futures have gotten a serious reality could almost say that the sky-high prices for this commodity were "transitory"

June 15, 2021

Wall Street opens cautiously ahead of the Fed

After that flurry of economic data, the New York stock exchange has opened cautiously ahead of tomorrow's Federal Reserve decision.

Energy stocks are rallying, as crude oil prices hit their highest levels in over two years. But other stocks are more subdued, with retailers, and some banks and tech firms dipping.

So after opening at a record high, the S&P 500 index has slipped a little. (@Investingcom)


June 15, 2021
  • Dow Jones industrial average: Down 121 points or 0.35% at 34,272 points
  • S&P 500: down 6 points or 0.15% at 4,248 points
  • Nasdaq Composite: down 27 points or 0.2% at 14,146 points

Chevron are leading the Dow risers, up 1.6%, followed by American Express (+0.6%), while JP Morgan (-1.5%) and DIY chain Home Depot (-1.1%) are leading the fallers.

US factory production has picked up, led by a recovery in car manufacturing.

Total industrial production increased 0.8% in May, new data from the Federal Reserve shows, following a downwardly revised 0.1% in April. Manufacturing production advanced 0.9 percent, led by a 6.7% gain in production of motor vehicles and parts -- after the computer chip shortage hammered output earlier this year.

The Fed says:

Overall vehicle assemblies jumped about 1 million units to 9.9 million units (annual rate); even so, they remained more than 1 million units below their average level in the second half of 2020, as production continued to be hampered by shortages of semiconductors

Liz Ann Sonders (@LizAnnSonders)

Industrial production in May stronger at +0.8% vs. +0.7% est. & +0.1% in prior month (unfortunately rev down from +0.7%); factory production +0.9% vs. -0.1% prior; utilities +0.2% vs. +1.9% prior; mining +1.2% vs. -0.4% prior

June 15, 2021

US producer price inflation jumps to 6.6%

US producers kept hiking their prices in May, in another sign that inflationary pressures are building.

Producer prices rose by 6.6% per year in May, the largest increase since the Bureau of Labor Statistics began calculating 12-month data in November 2010.

Core PPI inflation (stripping out food, energy and trade services) climbed 5.3% - the highest since data began in August 2014. On a monthly basis, the producer price index rose 0.8%.

Goods inflation drove prices higher, up 1.5% in May while services prices rose 0.6%.

Prices of goods such as non-ferrous metals, meat, fuel, and motor vehicles increased in May. On the services side, the cost of automobile retailing, freight transport, clothing and footwear retailing, portfolio management and building materials supplies retailing all rose.

Firms are raising their prices following a jump in costs -- such as raw materials, transport and wages -- and in response to higher demand.

Neil Birrell, Premier Miton Chief Investment Officer, says this may put pressure on the Federal Reserve as it starts its two-day meeting today:

"US producer prices jumped much more than expected to 6.6% in May; this could put a bit of pressure on the Fed tomorrow in how they word their comments on inflation and the outlook for rates.

Meanwhile, retail sales missed expectations, showing a big drop over April, suggesting that the consumer recovery may not be as strong as thought, but this is only one data point in a strong recovery."

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