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Authored by Brent Hamachek via HumanEvents.com,

The following address was delivered on Saturday, July 3rd, 2021 as part of the Red, White, and Blue Tour in Sturgis, South Dakota.

It was 245 years ago that a brave group of American colonists sent what was effectively a legal complaint to the King of England. Inspired by the English jurist William Blackstone, the complaint contained a list of the colonists’ grievances, then demanded their independence as compensation for damages. This citizen’s complaint is commonly known as the Declaration of Independence.

We won our independence, but we now suffer under a new sort of tyrant. We find ourselves bound by the invisible chains of codependence.

We celebrate July 4th, 1776, as our nation’s birthday. It is not, in the strictest sense, the date of our birth; nor is it even the actual year. Depending on how you choose to define it, our nation was actually “born” either in 1787 (with the signing of the Constitution), in 1788 (with the ratification of the Constitution), or in 1789 (with the convening of the First Congress). What then should we call July 4, 1776? It is the day we got pregnant. What followed was a long and bloody path toward liberation and birth.

Today, the Declaration of Independence is one of the (if not the) most cherished American documents. Its language is inspiring, and it reminds us of the incredible courage shown and the price paid by those who risked and gave all to secure for us the gift of freedom. It is a foundational part of our history.

But it is not a part of our present. We no longer are a distant colony living under the rule of an unreasonable king. We won our freedom, wrote a constitution, and built a new nation. Using the greatest ideas from the Enlightenment, our founding fathers started us on a path that led us to become the greatest nation in the history of Western Civilization.

We won our independence, but we now suffer under a new sort of tyrant. We find ourselves bound by the invisible chains of codependence. We are not being ruled unreasonably by others. Instead, we are unreasonably letting ourselves be ruled by the need to appear caring and helpful. We are supporting, perpetuating, and enabling the irresponsible and destructive behavior of our fellow citizens who are determined to fundamentally transform the tenets of Americanism.

It is, therefore, once again time for a statement to be made and for lines to be drawn. We cannot find the strength to restore our republic if we cannot first find the strength to set our own minds, bodies, and consciences free. It is time to formally and publicly decline to remain codependent.

WILLIAM BLACKSTONE.

THE DECLINATION

When in the course of human events, it becomes necessary for a group of people, who believe in the laws of nature and in nature’s God, to dissolve the codependent bands that (to their own great detriment) have connected them to others, a decent respect for the opinions of mankind require that they list the actions they intend to take in separation and rebellion.

Let it first be clear, we hold these truths to be self-evident:

• That all Americans are created equal.

• That they are endowed by their Creator with, and have had codified in their Constitution, certain inalienable rights. These include the right to life, liberty, the pursuit of happiness, and the right to act as we choose insofar as we do not compel others to act as we choose.

• That these rights have been gradually eroded, both through public seizure and voluntary surrender.

• And to continue to allow these rights to be denied to us by others—or worse, to voluntarily surrender our rights for the sake of and in appeasement to others—is immoral.

Since our present circumstance has become destructive toward the above-mentioned truths, it is the right of the American people to abolish the current state of affairs and to institute a new order, one based upon:

• Self-understanding

• Self-respect

• Self-confidence

• Self-determination

• Self-preservation

History has shown that people are more disposed to suffer and stay silent while evils are sufferable than they are to stand up and fight on behalf of themselves. With respect to their perception vis-à-vis others, they also are inclined to be governed and inhibited by three types of fear:

• The fear of losing something they think they have.

• The fear of not getting something they want.

• The fear of not being liked.

These fears can lead a free people to subjugate their own free will, and to establish in its place a sort of social codependence that erodes their freedoms and weakens their very God-given soul. But when a long train of abuses, usurpations, oppression, and persistent censorship leaves them no alternative, then it is their right—their duty—to throw off such suppression, as well as their inhibitions.

Today’s true Americans have spent so much time trying to prove who and what they are not that they have forgotten who and what they are. That ends now.

AMERICAN REVOLUTIONARY WAR.

Therefore, we are resolved that from this moment forward, in declining our codependence on those who do not hold to our truths, that we shall:

1. Break loose from the self-fitted chains and shackles of political correctness.

2. Take back our language: no longer will we surrender words and phrases from our language to others. We will use the words we choose, regardless of their contemporary characterization or classification by others.

3. Not be made to condemn or apologize for the actions of others. Likewise, we will not be made to applaud or affirm the behavior of others. We will apologize only for our own actions, when we feel it appropriate, and we will salute others only when we are personally so moved.

4. Never deny our friendships or turn our backs on those of us who are being attacked by others simply because it is easier, convenient, or avoids confrontation.

5. In accordance with the above, we will not hesitate to intervene in a situationally appropriate manner when we see one of our fellow citizens coming under attack. To turn away is to become complicit.

6. Let those around us know that when they attack any one of us, they attack all of us.  e will not tolerate the phrase “but I didn’t mean you.”

7. Embrace the classical notions of being masculine and feminine whenever and however we choose, and we shall not make excuses or issue apologies for so doing.

8. Be skeptics at every turn when someone claims to be an “expert,” an “authority,” or a follower of “science.”

9. Not allow ourselves ever to use the excuse “I was just following orders” to serve as a reason for engaging in or helping to silence or harm our fellow citizens.

10. Not engage in defending ourselves when we are called “racist,” when we are called “homophobic,” when we are called “privileged,” when we are called “xenophobic,” or when we are labeled by anyone other than ourselves. We will not respond by giving examples of people we know or things we have done to prove what we are and what we are not. We do not need to try to justify ourselves or disprove baseless accusations to others. We will simply respond: “Your words. Not mine.”

11. Embrace our faith in God if we possess such faith, without reservation. We may wear it on our sleeves, or we may keep it to ourselves. We will display our faith however we so choose, and will not deny the existence or importance of our faith for the sake of providing false comfort to others.

12. Refuse to acknowledge the need for and legitimacy of “safe spaces” or “microaggressions.”  Simply because someone else decides they are threatened or offended will not be a reason for us to question our beliefs, our words, or our actions.

13. Call “lies” by their proper name—which is “lies.”

14. Not give the benefit of the doubt to those who seek to silence us or control us by presuming they are of good intentions. We will take them at their word and assume they mean and intend exactly what they say.

15. Take great care in using terms such as “courage” and “bravery,” understanding that those terms have become corrupted in their use to signify simple acts of hate and defiance. We know true courage and bravery when we see it, and we will not lose sight of either.

16. Be unwavering and undeterred in proclaiming that the interests of American companies, workers, and citizens must be placed above all other interests when it comes to matters of policy.

17. Look directly at God, ourselves, and another human being every single day and say these words out loud: “I know who I am.”

SIGNING OF THE DECLARATION OF INDEPENDENCE.

We, therefore, the free people of the United States of America, do solemnly publish and declare our new independence by declining to be codependent upon those who seek to do us harm. There can be no harsher sentence served upon a people than that of being held prisoner to the approval of others.

We recognize that, in making this Declination, we place ourselves at risk of various forms of reprisal. We do so, knowing that the truest expression, the fulfillment of individual freedom, is the willingness to place that freedom at risk for the purpose of preserving it, so that future generations of Americans might enjoy it.

As we join in this Declination, we do so with a firm reliance on the protection of divine Providence, and we mutually pledge to support each other with our lives, our fortunes, and our sacred honor.

*  *  *

This article is part of a Human Events Opinion Special Collection released July 4th, 2021: “INDEPENDENCE DAY 2021.” You can read the other pieces in the collection here.

It was another rollercoaster week - the 11th drop in the past 13 - which however ended with a monster rally in bonds and stocks as markets priced in the coming Fed rate cuts, and although it'll likely be on the quieter side in markets today, we won't be able to escape the near-term recession risks for very long. As we noted last week, the Atlanta Fed Q2 tracker is now at -2.08% after slumping into negative territory at the end of last week, and if this is close to the mark that would mean two negative quarters and a technical recession.

The official definition is owned by the NBER and they will likely need more evidence (and a political green light or three) before they would declare it as they look at a broader range of indicators than just headline growth. However we'll likely know we're in it before it's declared so it'll be crucial to work out if this is the start to a descent into bigger problems or if that's still some months away. Note, as Deutsche Bank's Jim Reid notes, it continues to be "when not if".

A big swing factor here could be employment and this week is jam packed with US labor data. Payrolls (Friday) will be the headliner but JOLTS (Wednesday), ADP and claims (Thursday) will also be very important. As Jim Reid notes, labor markets remain strong around the world and although this is a generally a lagging indicator, some kind of turn should occur before we can declare what is absolutely the inevitable dive into recession (there is an outside chance of a negative print as soon as this Friday).

For what it's worth, DB economists expect payrolls to slow (+225k forecast vs. +390k previously) but with unemployment falling a tenth to 3.5%. In many ways JOLTS (Wednesday) is the preferred employment measure although it has the disadvantage of being even more delayed as it is a month behind so we'll only get May's data this week. In the report, job openings have remained roughly 4.5mn above where they were prior to the pandemic so unless this dips there will still be a lot of demand for labor and the tightness will continue, leaving the Fed with a huge dilemma as growth slows. June's US services ISM on Wednesday will be watched for the headline growth implications and also the employment component which has been 'only' hovering around 50 in recent months.

It's worth noting, as DB's Reid does, that the increased growth pessimism towards the end of last week stabilized equities as a big rally in bonds and a more dovish repricing of the Fed kicked in. 10yr Treasuries rallied -25.0bps last week (-13.3bps Friday), their largest weekly decline since March 2020, and although the S&P 500 finished -2.21% lower, it did rally +1.06% on Friday on lower yields as Fed expectations kicked in.

Back to the week ahead and we'll see how central banks were thinking about this weak growth vs labor tightness dilemma in the minutes from the Fed's (Wednesday) and ECB's (Thursday) June meetings but this will be slightly dated in light of how rapidly the macro is evolving.

Elsewhere, trade and industrial data will be due from key economies globally. May trade data will be out for the US (Thursday), Germany (today), Japan and France (Friday). For the US, May factory orders will be released tomorrow, followed by June's ISM services index on Wednesday. In Europe, the Eurozone's PPI for May is due today, followed by May industrial production for Germany (Thursday) and France, June PMIs for Italy (Tuesday), and Germany's May factory orders (Wednesday).

In Asia, the highlight will perhaps be the Caixin services and composite PMIs for China and the RBA meeting taking place tomorrow. Our economists expect the central bank to hike by +50bp.

Courtesy of DB, here is the full week ahead calendar day-by-day

Monday July 4

• Data: Japan June monetary base, Germany May trade balance, Eurozone May PPI, Canada June PMI
• Central banks: ECB's Nagel and Guindos speak, BoC's Business Outlook

Tuesday July 5

• Data: US May factory orders, China June services and composite Caixin PMIs, Japan May labour cash earnings, France May industrial and manufacturing production, Italy June services and composite PMI, deficit to GDP Q1, UK June new car registrations, official reserves changes, Canada May building permits
• Central banks: BoE's financial stability report, BoE's Tenreyro speaks. RBA meeting.

Wednesday July 6

• Data: US June ISM services index, May JOLTS report, China June foreign reserves, Germany May factory orders, June construction PMI, UK June construction PMI, Eurozone May retail sales
• Central banks: FOMC June meeting minutes, ECB's Rehn speaks, BoE's Pill and Cunliffe speak

Thursday July 7

• Data: US May trade balance, June ADP employment change, initial jobless claims, Japan May leading and coincident index, Germany May industrial production, Canada May international merchandise trade
• Central banks: ECB's account of June meeting, Fed's Waller and Bullard speak, BoE's decision maker survey, BoE's Mann speaks, ECB's Lane, Stournaras, Centeno and Herodotou speak

Friday July 8

• Data: US June nonfarm payrolls report, unemployment rate, participation rate, average hourly earnings, May wholesale trade sales, consumer credit, Japan June Economy Watcher survey, bank lending, bankruptcies, May household spending, trade balance, France May trade balance, Italy May industrial production, Canada June net change in employment, unemployment rate, hourly wage rate, participation rate
• Central banks: Fed's Williams speaks, ECB's Lagarde and Villeroy speak

* * *

Finally, looking at the US, Goldman notes that the key economic data releases this week are the JOLTS job openings and ISM services reports on Wednesday, and the employment situation report on Friday. The minutes from the June FOMC meeting will be released on Wednesday and there are several speaking engagements from Fed officials, including Governor Waller and presidents Williams and Bullard.

Monday, July 4

• There are no major economic data releases scheduled.

Tuesday, July 5

• 10:00 AM Factory orders, May (GS +0.6%, consensus +0.5%, last +0.3%); Durable goods orders, May final (last +0.7%); Durable goods orders ex-transportation, May final (last +0.7%); Core capital goods orders, May final (last +0.5%); Core capital goods shipments, May final (last +0.8%): We estimate that factory orders increased 0.6% in May following a 0.3% increase in April. Durable goods orders increased 0.7% in the May advance report, and core capital goods orders increased 0.5%.

Wednesday, July 6

• 09:00 AM New York Fed President Williams (FOMC voter) speaks: New York Fed President John Williams will make remarks at a virtual event on bank culture hosted by the New York Fed. On June 28, President Williams said, “In terms of our next meeting, I think 50 to 75 [basis points] is clearly going to be the debate. He added, “We’re far from where we need to be [regarding the federal funds rate]. My own baseline projection is we do need to get into somewhat restrictive territory next year given the high inflation...” He also indicated his growth forecast falls on the lower range among Fed officials: “I am expecting growth to slow this year, quite a bit, relative to what we had last year, and actually to slow to probably 1% to 1.5% GDP growth.”
• 09:45 AM S&P Global US services PMI, June final (consensus 51.6, last 51.6)
• 10:00 AM ISM services index, June (GS 54.4, consensus 54.0, last 55.9): We estimate that the ISM services index declined 1.5pt to 54.4 in June. Our forecast reflects sequential weakness in construction and real estate activity and the decline in our services tracker (-2.6pt to 53.9).
• 10:00 AM JOLTS job openings, May (consensus 11,000k, last 11,400k)
• 02:00 PM FOMC meeting minutes, June 14-15 meeting: The FOMC increased the federal funds rate target range by 75bp to 1.5%-1.75% at its June meeting. The median dot in the Summary of Economic Projections (SEP) showed a funds rate midpoint of 3.375% at end-2022. The statement dropped the expectation of a strong labor market, instead emphasizing that the Committee is “strongly committed” to returning inflation to target. The SEP showed a 0.5pp increase in the unemployment rate by end-2024 and below-potential GDP growth in 2022 and 2023.
• On June 22, Chair Powell reiterated that the Fed will make “continued expeditious progress toward higher rates,” and noted “financial conditions have already priced in additional rate increases, but we need to go ahead and have them.” Chair Powell also noted that the Fed would not engage in active sales of mortgage-backed securities anytime soon. He emphasized that while the FOMC is “not trying to provoke and do not think we will need to provoke a recession,” it remained “absolutely essential” for the Fed to restore price stability, and noted that it would be “very challenging” for the Fed to achieve a soft landing.

Thursday, July 7

• 08:30 AM Trade Balance, May (GS -$84.7bn, consensus -$84.9bn, last -$87.1bn): We estimate that the trade deficit decreased by $2.4bn to -$84.7bn in May, reflecting an increase in exports in the advanced goods report.
• 08:30 AM Initial jobless claims, week ended July 2 (GS 225k, consensus 230k, last 231k); Continuing jobless claims, week ended June 25 (consensus 1,330k, last 1,328k); We estimate initial jobless claims ticked down to 225k in the week ended July 2: 
• 01:00 PM Fed Governor Waller (FOMC voter) speaks: Fed Governor Christopher Waller will participate in an interview during a virtual National Association for Business Economics (NABE) event. A moderated Q&A is expected. On June 18, Governor Waller said, “This week, the FOMC took another significant step toward achieving our inflation objective by raising the Federal Funds rate target by 75 basis points. In my view, and I speak only for myself, if the data comes in as I expect I will support a similar-sized move at our July meeting.” He added, “The Fed is ‘all in’ on re-establishing price stability.”
• 01:00 PM St. Louis Fed President Bullard (FOMC voter) speaks: St. Louis Fed President James Bullard will discuss the economic outlook and monetary policy at an event hosted by the Little Rock Regional Chamber. A Q&A with media and audience is expected. When discussing the US economy on June 24, President Bullard said, “I actually think we will be fine. It is a little early to have this debate about recession probabilities in the US” and reiterated his call for “front-loading” rate hikes. He noted, “this is in the early stages of the US recovery – or US expansion, we are beyond recovery. It would be unusual to go back into recession at this stage. Interest-rate increases will slow down the economy, but will probably slow down to more of a trend pace of growth as opposed to going below trend. I don’t think this is a huge slowing. I think it is a moderate slowing in the economy.” On June 28, he published an essay on lessons from the 1974 and 1983 US policy responses to inflation.

Friday, July 8

• 08:30 AM Nonfarm payroll employment, June (GS +250k, consensus +273k, last +390k); Private payroll employment, June (GS +200k, consensus +240k, last +333k); Average hourly earnings (mom), June (GS +0.3%, consensus +0.3%, last +0.3%); Average hourly earnings (yoy), June (GS +5.0%, consensus +5.0%, last +5.2%); Unemployment rate, June (GS 3.6%, consensus 3.6%, last 3.6%): We estimate nonfarm payrolls rose by 250k in June (mom sa), a slowdown from the +390k pace in May. Job growth tends to be strong in June when the labor market is tight as firms aggressively hire youth summer workers. However, the June seasonal factors have evolved significantly more restrictive—perhaps overfitting to the reopening-related job surges in June 2020 and June 2021—and represent a headwind of roughly 200k in our view. Additionally, Big Data employment indicators were generally weaker in the month, consistent with a possible drag from tighter financial conditions and modestly higher layoffs in the retail and tech sectors. We estimate an unchanged unemployment rate at 3.6%, reflecting a solid rise in household employment offset by a 0.1pp rise in labor force participation to 62.4%. We estimate a 0.3% rise in average hourly earnings (mom sa) that lowers the year-on-year rate by two tenths to 5.0%. The arrival of the youth labor force may have eased some of the upward pressure on wages, but we see scope for supervisory earnings to rebound after two weak months (we assume neutral calendar effects).
• 10:00 AM Wholesale inventories, May final (consensus +2.0%, last +2.0%)
• 11:00 AM New York Fed President Williams (FOMC voter) speaks: New York Fed President John Williams will make remarks at an event hosted by the University of Puerto Rico. A Q&A with media and audience is expected.

Source: DB, BofA, Goldman Sachs

By Jane Foley, head of FX strategy at Rabobank

Copper prices plunged to a 17 month low on Friday, demonstrating the rise of recession fears. 

The metal, used in electrical circuits in everything from construction, cars and appliances is often traded as a bellwether for growth.  Copper is currently trading just above USD8,000 a tonne on the LME.  This compares with the year’s high around USD10,600 a tonne.  In a quiet Asian session ahead of the UK July 4 holiday, Asian shares crept a little higher this morning and US equities futures gained a little ground.  However, this is small comfort given the horrific ride for stocks in the first half of the year.

Friday’s releases of US May construction spending and June ISM manufacturing surveys both missed the mark and accentuated fears of a hard-landing.  The latter follows declines in the Chicago PMI, the Richmond Fed, Dallas Fed and Philly Fed.  Even ahead of Friday’s data releases estimates of Q2 US GDP growth were already being revised down, with some market estimates even pointing to the risk of technical recession in the US in H1 given the negative print for Q1 US GDP.   

As fears of a slowdown tightened their grip, treasury yields dropped with the short-end of the curve leading the way as market priced in a less aggressive trajectory for Fed rate hikes.

In Germany, Bloomberg data indicate that 2 year Bund yields registered their biggest weekly swing on record, in data dating back to 1990.  On Friday alone yields dropped as much as 24 bps.  A similar move was recorded by 2 year gilts as the market second guessed its assumption that the BoE could hike aggressively in the months ahead in the face of a painful cost of living crisis.

The turmoil in the bond markets also played out in foreign exchange.  EUR/USD plunged to 1.0366 on Friday afternoon before finding a little composure. Cable slipped all the way to 1.1976 before finding buyers.  Friday’s final June UK manufacturing PMI release recorded a weaker than expected outcome.  At 52.8, this was the lowest reading for the index since June 2020.  Of particular concern is the drop in the new orders index to 48.3, a level suggestive of contraction.

Despite the recession fears, most stocks US and European stocks indices closed the session in the green.  That said higher interest rates, and fears of falling demand clearly point to a rocky road for equity indices.  The forthcoming round of earnings report could be a difficult read for many investors.  While most commodity prices have dropped back sharply from their highs on the back of recessionary fears, energy security issues remain a huge concern in Europe.

European natural gas prices are on the rise again this morning with around 13% of Norway’s daily gas exports reportedly at risks due to strike action.  Over the weekend, the head of Germany’s energy regulator urged residents to conserve energy and to prepare for winter while Chancellor Scholz indicated that the government may be ready to support Uniper, the biggest buyer of Russian gas in Germany.  A week ago Germany’s Economy minister Habeck warned of gas shortages and production suspensions for industry on the back of energy security risks.  Clearly this has fed recessionary fears in the Eurozone.

Russia has now claimed full control of the Luhansk region after seizing the last Ukrainian stronghold.  Putin’s advisor Peskov has stated that Ukraine would have to agree to all of Russia’s conditions for the war to end.  The focus of the conflict now shifts to the neighbouring Donetsk region, where Kyiv maintains control of large territories.

Authored by Brig Gen (ret) Blaine Holt via NewsMax.com,

Marinate those ribs, ice the beer, and get the fireworks ready so we can revel in the red, white, and blue. Let's raise our collective glasses today to the bold few who spoke on our behalf more than 200 years ago.

Thomas Jefferson’s inspired words live on: "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness."

Can you imagine how electric the atmosphere must have been on that steamy summer day when the Founders, having agreed to the brave separation from the British Crown on July 4, 1776 - committed their lives, fortunes, and sacred honor to each other as 51 of the 56 signers executed the Declaration of Independence.

The American Constitution is the longest standing governing document in the history of the world. We owe the Founders not just gratitude, but a civic commitment backed by our lives, fortunes, and sacred honor to protect and preserve liberty.

Free people in hot pursuit of their happiness are quite an excitable and often unruly lot.

Established old money elites and entrenched academics have long denigrated the power and influence that came from innovation and hard work.

From Woodrow Wilson to Henry Kissinger to the Davos elites, the usurpation of liberty through the attacks on individual freedoms guaranteed in the Bill of Rights are being fired upon citizens at a rapid pace.

The nefarious plot to slowly eat away at liberty has been working for more than 70 years.

Global elitist, Henry Kissinger had the playbook when he said; "Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world."

Since Wilson’s day the elites have worked overtime imagining ways to bridle, We the People. Rather than the ho-hum predictable "good 'ole boys (and girls) clubs," or access to capital and opportunity based on your last name, they have leveraged eager and willing accomplices in government bureaucracy to establish what we all know as "the system.”

Professional politicians beholden to big money rarely fear the people or the ballot box.

Voila! - Your 40-year, double-digit term senators and representatives are born.

Payback to the donor class comes in the form of legislation which enriches their bank accounts, subjugating us.

The government boasts how wonderful it will be for us all when we give up our cars and need for oil. Washington’s political class are beyond overjoyed that diesel averaging $6.00 a gallon, while the middle class drowns in $5.00 per gallon.

Fearing the ballot box? Is it rigged?

The Patriot Act, property tax, property rights, censorship, warrantless surveillance, vaccine mandates, money printing, congressional insider trading, et al, etc. and ad nauseum.

The list of liberty-crushing attacks on we the people is infinite.

Remember when our pugilist spirit fought back?

Give me liberty or give me death meant something the first 200 years of our nation.

Perhaps the biggest, most unwieldy monopoly of all is our federal leviathan, I mean government. The Washington cabal works to achieve personal agendas at the expense of the "formerly" free, and you-had-better be brave!

Don’t take my word for it, call your congressman’s office — today, as in right now.

Ask the young staffer answering the phone about where their Congressman falls on monopolies, downsizing the government, and spending less of your tax money on stupid things like gambling pigeons, Russian zombie cats, or the NSA’s unused parking garage.

Yep, all true. Don’t take my word for it, check it out here.

As difficult as this it may seem to break free of the party shackles, we need to summon our inner Houdini just the same.

If we could hear ghosts, our Founders, all the heroic veterans who died for this nation would be screaming for us to wake up.

If the heroes who came before us will not motivate you, then think of our children and grandchildren. America’s posterity deserves to live free in a land of opportunity where anyone regardless of their circumstance can rise and fulfill their dreams.

The alternative is shrivel into a cowardly heap, because we were told by the media, pundits, politicos, and B-class Hollywood starlets that this pursuit of happiness stuff will create a lot of carbon.

It’s so weird that those in the "club" don’t seem to prefer impossible meat and bicycles.

Perhaps that’s unfair; it’s possible that you can find both in their Gulfstream jets, but the windows are tinted.

Mobilize. Organize. Vote.

Independence Day?

Are we celebrating Independence Day? Or, are we celebrating that once, we were independent?

Let’s not lament that once we were free. Let’s celebrate that we will be again.

Authored by Dave DeCamp via AntiWar.com,

Russian President Vladimir Putin said Friday that sanctions and other pressure from the West have sped up the "unification process" for Russia and Belarus.

The two nations signed an integration treaty in 1997. The process has been sped up since the US and its allies rejected the result of Belarus’ 2020 presidential election that saw Alexander Lukashenko win another term.

After the election, the US and EU started imposing sanctions on Belarus and threw support behind an exiled opposition leader. As a result, Lukashenko drew closer to Putin, and Russia was able to launch the initial phase of its invasion of Ukraine from Belarusian territory.

Since the invasion, the West has targeted Belarus with the same sanctions Russia is being hit with. Putin said the pressure was "pushing us to speed up the unification process."

"After all, acting together it’s easier to minimize the damage from illegal sanctions, it’s easier to start production of products that are in demand, develop new competencies and expand cooperation with friendly countries," the Russian leader said.

Under the 1997 agreement, known as the Union State, Russia and Belarus would remain separate sovereign states, but people living in each country would get citizenship for the other and would be able to travel freely.

Russia and Belarus are also stepping up military cooperation, and Putin said this week that he will send nuclear-capable Iskander-M missiles to Belarusian territory. Putin also plans to help Belarus upgrade its fighter jets, so they are capable of carrying nuclear weapons.

After Friday's torrid surge, which some speculated was due to pension funds tactically delaying their month-end buying until the start of the next month coupled with another major squeeze as recession fears overflowed and the market priced in a whopping 15bps of rate cuts in Q1 2023 due to the start of the Biden recession (because bad news is again good news), futures initially dipped before recovering most of their losses after the WSJ reported that Biden is "expected to roll back some tariffs on Chinese imports soon, a decision constrained by competing policy aims: addressing inflation and maintaining economic pressure on Beijing." Maybe, but all the decision which also weakened the dollar, will show is that as expected all along, the president - or rather his son - was in China's pocket from the very beginning.

In any case, after dropping below 3,800, S&P futures bounced and were trading near session highs, if still down 0.2% from Friday's high, when US stocks capped their 11th decline in 13 weeks (Let's go, Brandon). Today's illiquid session, which sees US cash markets closed due to the July 4 holiday, has also seen Nasdaq futures down 0.4% while Dow futs were down -0.1%.

After a catastrophic first half and the first bear market since Covid, stocks remain in the grip of the worst selloff in at least three decades as increasing chances of a global recession are spooking investors. At the same time, sticky inflation has left little room for the Federal Reserve to apply brakes on monetary tightening. This toxic combination presents markets a trading challenge not seen since the late 1970s, and only a massive recession, one which eliminates the risk of inflation and ushers in aggressive Fed easing can help save the day.

The MSCI All-Country World Index plunged 21% in the first half, the worst YTD losses since at least 1988. Similarly, the 14% loss in the Bloomberg Global Aggregate Index of investment-grade debt was its worst performance since 1990, the earliest date for which records are available.

"The market has begun to worry more about economic growth than just liquidity withdrawal and inflation,” Stephen Innes, managing partner at SPI Asset Management, wrote in a note. “Unlike previous downturns, inflation is much higher and unemployment is much lower. These dynamics delay any potential dovish central-bank pivot despite the rapid shift in front-end rate expectations over the past week."

Across the Atlantic, European stocks rose 0.9% for the first time in four days as dip-buyers emerged, and returned to best levels after a choppy start. Euro Stoxx 50 rose as much as 0.75%, with CAC outperforming. Energy, healthcare and telecoms are the strongest Stoxx 600 sectors. Banks that are most sensitive to economic conditions, including Spanish and Italians lenders as well as Germany’s Commerzbank, underperformed on Monday as investors remain concerned about an economic slowdown and high inflation. Among the worst performers are Sabadell -3.1%, Intesa -2.9%, Banco BPM. Italian bonds tumbled with investors watching domestic political tensions. Here are the biggest European movers:

• AO World shares slump as much as 18%, to the lowest since March 2020, after the Sunday Times reported that credit insurer Atradius has reduced cover for suppliers to AO World.
• Shop Apotheke falls 13%, the sharpest intraday decline since May 10, after Oddo downgrades the stock to neutral from outperform.
• Grafton shares drop as much as 8.8%, the most in more than two years, after the building and home products supplier announces that CEO Gavin Slark is stepping down.
• Ashmore shares drop as much as 4.7% after Numis cut its recommendation on the emerging-market fund manager to hold from add, saying the investment outlook is poor and performance is weak.
• Maisons du Monde shares drop as much as 7.5% to the lowest level since May 2020 after being downgraded to reduce from hold at Kepler Cheuvreux, in a note called “Between a rock and a hard place.”
• SBB falls as much as 8.2% Monday, giving up some of Friday’s 10% gain, having announced the sale of 25% of its shares in Solon Eiendom Holding AS to OBOS.
• Polish banks fall after Poland’s ruling party leader threatened lenders with additional tax on their profits if they don’t increase interest on household deposits.
• Alior Bank falls 4.9%, Bank Handlowy -4.5%, Millennium -4.1%
• Waberer’s gains as much as 27%, the biggest intraday jump on record, after owners that together control a majority of the Hungarian hauler filed a buyout offer at HUF2,336 per share.

Earlier in the session, Asian equities edged higher amid optimism the region’s earnings will prove resilient as the reporting season gets underway. The MSCI Asia Pacific Index climbed as much as 0.8%, buoyed by consumer discretionary shares as most sectors advanced. Benchmarks in Australia and Japan were among the best performers in the region. Bucking the trend, Indonesia’s stock gauge slumped more than 2% as a decline in commodity prices caused traders to book profits on Asia’s top-performing market this year.  While recession concerns have been weighing on global stock markets, falling commodity prices may ease inflationary pressure in Asia. China’s progress toward economic reopening may also help Asian stocks recover from their worst first half in three decades. “We are less threatened by inflation in the region, so a lot of corporations in Asia are going to see a better time in terms of earnings” as valuations have fallen, Vicki Chi, a fund manager at Robeco, told Bloomberg Television. China’s shares closed modestly higher as the nation races to quash a new virus flareup that risks spilling over into one of its most economically significant regions.

In China, officials were trying to repel a Covid flareup that could buffet an economically significant region. That’s another test of Beijing’s strategy of trying to eliminate the pathogen with mass testing and disruptive lockdowns. Separately, developer Shimao Group Holdings Ltd. said it didn’t pay a $1 billion dollar note that matured Sunday, among the biggest dollar payment failures so far this year in China.

In FX, the dollar dipped after the WSJ report that Biden may announce a decision to cut Chinese tariffs this week; at the same time the USD/CNH dropped 0.2% near 6.68, and EMFX caught a small bid with ZAR outperforming.

 Bitcoin hovered above the $19,000 level.

Fixed income traded heavy with curves bear flattening. Short end of the German curve underperforms, cheapening ~11bps in 2s and 5s. Gilts outperform bunds by ~2bps.  Italian bonds slid before a meeting between Prime Minister Mario Draghi and Five Star leader Giuseppe Conte to settle weeks of political tensions. The nation’s 10-year yield jumped 12 basis points to 3.21%, widening its spread over German bunds to 1.90 percentage points. Cash Treasuries are closed for Independence Day, T-note futures are range-bound.

In commodities, crude futures extended their rebound from the recent hammering, rising over $15 to trade $109.44 while Brent rose to $113.3. Most base metals trade in the green; LME nickel rises 3.7%, outperforming peers. LME lead lags, dropping 0.4%. Spot gold falls roughly $6 to trade near $1,806/oz.

* * *

DB's Jim Reid concludes the overnight wrap

Happy Independence Day to all of our US readers. It's nice that we can be friends again after 246 years. Although I hope relations haven't been strained by me publishing the chart over recent weeks that US 10yr treasuries (and earlier proxies) have seen their worst H1 for 244 years and just after the divorce.

Having said that the week ended with a monster rally in bonds, and although it'll likely be on the quieter side in markets today, we won't be able to escape the near-term recession risks for very long. The Atlanta Fed Q2 tracker is now at -2.08% after slumping into negative territory at the end of last week, and if this is close to the mark that would mean two negative quarters and a technical recession. The official definition is owned by the NBER and they will likely need more evidence before they would declare it as they look at a broader range of indicators than just headline growth. However we'll likely know we're in it before it's declared so it'll be crucial to work out if this is the start to a descent into bigger problems or if that's still some months away. Note it continues to be "when not if".

A big swing factor here could be employment and this week is jam packed with US labour data. Payrolls (Friday) will be the headliner but JOLTS (Wednesday), ADP and claims (Thursday) will also be very important. Labour markets remain strong around the world and although this is a generally a lagging indicator, we think some kind of turn should occur before we can declare what is absolutely the inevitable dive into recession.

Our economists expect payrolls to slow (+225k forecast vs. +390k previously) but with unemployment falling a tenth to 3.5%. In many ways JOLTS (Wednesday) is our favoured employment measure but it has the disadvantage of being a month behind so we'll only get May's data this week. In the report, job openings have remained roughly 4.5mn above where they were prior to the pandemic so unless this dips there will still be a lot of demand for labour and the tightness will continue, thus leaving the Fed with a huge dilemma as growth slows. June's US services ISM on Wednesday will be watched for the headline growth implications and also the employment component which has been 'only' hovering around 50 in recent months.

Ironically the increased growth pessimism towards the end of last week stabilised equities as a big rally in bonds and a more dovish repricing of the Fed kicked in. 10yr Treasuries rallied -25.0bps last week (-13.3bps Friday), their largest weekly decline since March 2020, and although the S&P 500 finished -2.21% lower, it did rally +1.06% on Friday on lower yields as Fed expectations kicked in.

Back to the week ahead and we'll see how central banks were thinking about this weak growth vs labour tightness dilemma in the minutes from the Fed's (Wednesday) and ECB's (Thursday) June meetings but this will be slightly dated in light of how rapidly the macro is evolving.

Elsewhere, trade and industrial data will be due from key economies globally. May trade data will be out for the US (Thursday), Germany (today), Japan and France (Friday). For the US, May factory orders will be released tomorrow, followed by June's ISM services index on Wednesday. In Europe, the Eurozone's PPI for May is due today, followed by May industrial production for Germany (Thursday) and France, June PMIs for Italy (Tuesday), and Germany's May factory orders (Wednesday).

In Asia, the highlight will perhaps be the Caixin services and composite PMIs for China and the RBA meeting taking place tomorrow. Our economists expect the central bank to hike by +50bp. The full week ahead is in the day by day calendar at the end as usual.

This morning in Asia, markets are quiet with the Nikkei (+0.58%) leading the pack and with the Shanghai Composite (+0.14%) and CSI (+0.16%) swinging between gains and losses in early trade. Elsewhere, the Hang Seng (-0.63%) is lagging as the market resumes trading after a holiday on Friday. Meanwhile, the Kospi (-0.58%) is struggling a bit after paring its early morning gains. Over the weekend there has been some chattter of Covid-19 cases in China continuing to climb as new Coronavirus clusters emerged in eastern cities. So one to watch over the next few days.

Recapping last week now, and it marked the end of an ignominious first half for markets, which is an understatement if anything. See our H1, Q2 and June performance review here but in short, the S&P 500 had its worst start to the year in six decades, falling in return terms for consecutive quarters for the first time since the GFC, while 10yr Treasuries returned their worst first half since 1788.

Zooming in on the week in isolation, a nasty cocktail of underwhelming production, spending, and confidence figures, mixed with still stubbornly high inflation led to a risk sell-off but with a rare recent flight to quality into bonds.

Starting in Europe, ECB President Lagarde noted she did not believe we would return to the low environment world that defined the years running up to the pandemic, which, along with other ECB speakers throughout the week, continued to lay the groundwork for the hiking cycle to begin in July. Indeed, Eurozone CPI increased to 8.6% YoY, edging expectations of 8.5% even if German inflation temporarily eased. The STOXX 600 tumbled -1.40% (-0.02% Friday), which saw banks fall even more (-5.00%, -0.40% Friday).

10yr bund yields fell -21.0bps (-10.4bps Friday) while the 2yr rallied -29.7bps (-13.3bps Friday), bringing their decline to -57.8bps over the last two weeks, the largest two week decline since August 2011, on the prospect of a global growth slowdown that would stymie the ECB’s hiking cycle. In a sign of how volatile things have been, the weekly decline in 2yr yields was topped just back in March this year. On the periphery, 10yr BTPs kept pace, falling -37.2bps (-17.3bps Friday). Indeed, President Lagarde emphasised the ECB could use flexibility in reinvesting PEPP redemptions to support implementation starting this month.

In the US, consumer confidence sagged while inflation expectations climbed. Meanwhile, every regional Fed manufacturing index is now in contractionary territory, though PMIs and ISM Manufacturing figures remain in expansion, printing at 52.7 and 53.0, respectively on Friday. Piling on to the poor near-term outlook, however, ISM New Orders fell into contraction zone at 49.2 versus 52.0 expectations. Meanwhile, core PCE managed to still print at 6.3% YoY. That mix is driving grave comments from Fed officials. Chair Powell re-emphasised that this hiking cycle would cause some pain, while SF Fed President Daly noted a Fed-induced recession was now in her outlook - a rare comment from a Fed official.

It seems it’s also the market’s outlook. 10yr Treasuries rallied -25.0bps (-13.3bps Friday), their largest weekly decline since March 2020 when the pandemic first gripped global markets. That corresponded with a modest flattening in the 2s10s yield curve, but the shock lower was more or less parallel, as markets reduced the amount of tightening they believed the Fed would impart this cycle, with 2yr yields down -23.0bps (-12.0bps Friday), also the largest decline since March 2020.

With that mix, it’s perhaps unsurprising that the S&P 500 gave up ground over the week, closing -2.21% lower (+1.06% Friday). Utilities outperformed given the terrible risk sentiment, gaining +4.11% (+2.48% Friday), while mega-cap FANG+ (-5.42%, +0.92% Friday) and tech-heavy NASDAQ (-4.13%, +0.90% Friday) had a rougher time.

Brent futures fell -1.48% (-2.93% Friday) in light of the slowing global growth narrative, registering their first monthly decline (-6.54%) since November when Omicron drove slowing global demand fears. In Europe, natural gas prices climbed +15.0% (+2.26 Friday), as supply constraints look set to grip markets, between a failing compressor in Norway and fears that Russia's planned maintenance period (July 11-21) for the Nordstream pipeline will be opportunistically used to restrict supply thereafter.