CMR is the leading provider of funding and management support for small to medium-sized businesses and entrepreneurs 

Just days after Meta unveiled it Quest 3 VR/AR headset (at an entry level price), Tim Cook is set to launch a high-end mixed-reality headset at today's Worldwide Developer's Conference.

As Engadget reports, Apple has been developing the device for many years, according to reports. The headset, said to be called the Reality Pro, is the company's most notable product launch at least since the arrival of the Apple Watch in 2015.

However, at an expected price of $3,000, the first version of the headset could be one primarily for early adopters.

"Consensus opinion is the headset would cost $3,000. Apple could surprise positively with a lower price. With a historical focus on design, creativity, collaboration, and fitness we view killer apps to focus on these areas or a combination of such," Bank of America's Wasmi Mohan said.

While Mohan rates Apple at "Neutral," he raised his price target to $190 from $176 on Monday, suggesting further upside of 5% from Friday's close.

"Apple best positioned to dominate mixed reality [market]," Mohan said.

As we noted previously, according to estimates from Statista Market Insights, users of AR and VR devices are still few and far between, with growth projections until 2027 nowhere near the scale that would make mixed reality “the next computing platform”, at least for now.

You will find more infographics at Statista

Statista estimates that 98 million people will be using VR hardware this year, while 23 million will be dabbling with more advanced AR technology. By 2027, both AR and VR are expected to have surpassed 100 million users worldwide, but that’s still a longshot from the billions of smartphone users across the planet.

Apple's share price surged to a new record high today...

But we note, due to buybacks, this is not the largest market cap the company has ever had - but it's getting close again to that $3 trillion level...

 

Watch the Apple launch event live here (due to start at 1300ET):

Update (1240ET): Binance has responded to the SEC allegations in a blog post: "SEC Complaint Aims to Unilaterally Define Crypto Market Structure"

We are disappointed that the U.S. Securities and Exchange Commission chose to file a complaint today against Binance seeking, among other remedies, purported emergency relief.  From the start, we have actively cooperated with the SEC’s investigations and have worked hard to answer their questions and address their concerns.  Most recently, we have engaged in extensive good-faith discussions to reach a negotiated settlement to resolve their investigations.  But despite our efforts, with its complaint today the SEC abandoned that process and instead chose to act unilaterally and litigate.  We are disheartened by that choice. 

While we take the SEC’s allegations seriously, they should not be the subject of an SEC enforcement action, let alone on an emergency basis. We intend to defend our platform vigorously.  Unfortunately, the SEC’s refusal to productively engage with us is just another example of the Commission’s misguided and conscious refusal to provide much-needed clarity and guidance to the digital asset industry. 

Today’s action is another in a line of examples where, as with other crypto projects facing similar suits, the Commission has determined to regulate with the blunt weapons of enforcement and litigation rather than the thoughtful, nuanced approach demanded by this dynamic and complex technology. Unilaterally labeling certain tokens and services as securities – even ones over which other U.S. authorities have asserted jurisdiction – only compounds these problems.

Perhaps most surprising, the SEC’s actions undermine America’s role as a global hub for financial innovation and leadership.  Digital asset laws remain largely undeveloped in much of the world, and regulation by enforcement is not the best path forward.  An effective regulatory framework demands collaborative, transparent, and thoughtful policy engagement—a path the SEC has abandoned.

And, to be clear: any allegations that user assets on the Binance.US platform have ever been at risk are simply wrong, and there is zero justification for the Staff’s action in light of the ample time the Staff has had to conduct their investigation.  All user assets on Binance and Binance affiliate platforms, including Binance.US, are safe and secure, and we will vigorously defend against any allegations to the contrary.  Rather, the SEC’s actions here appear to be in service of an effort to rush to claim jurisdictional ground from other regulators—and investors do not appear to be the SEC’s priority.  Because of our size and global name recognition, Binance is an easy target now caught in the middle of a U.S. regulatory tug-of-war. 

It seems based on these developments that the SEC’s goal here was never to protect investors; if that were truly the case, the Staff would have thoughtfully engaged with us on the facts and in our efforts to demonstrate the safety and security of the Binance.US platform.  The SEC’s real intent here, instead, appears to be to make headlines. 

We will continue to cooperate with regulators and policymakers in the U.S. and across the globe because that is the right thing to do.  And Binance remains committed to productive engagement to ensure the next generation of cryptocurrency regulation fosters innovation while implementing and ensuring important consumer protections.  Because Binance is not a U.S. exchange, the SEC’s actions are limited in reach.  Still, we stand with digital asset market participants in the U.S. in opposition to the SEC’s latest overreach, and we are prepared to fight it to the full extent of the law. 

We will work alongside industry partners to defend this important technology from misguided lawsuits.  And we will maintain our unceasing efforts to deliver a safe and trusted platform for our users that holds true to our core value of furthering the freedom of money.

Bitcoin continues to plunge...

*  *  *

In a not-so-surprising headline, WSJ reports that the SEC on Monday sued Binance, the world’s largest cryptocurrency exchange, alleging the overseas company operated an illegal exchange in the U.S.

The SEC lawsuit also named Changpeng Zhao, Binance’s founder and controlling shareholder, as a defendant. The SEC filed the case in federal court in the District of Columbia.

As a reminder, the CFTC sued Binance and Zhao himself in late March for allegedly violating derivatives regulations, and accused it of having “sham” compliance.

Binance also faces a Justice Department investigation over its program to detect money laundering, according to people familiar with the matter.

As usual, the initial kneejerk reaction to any regulatory headline is to 'sell' crypto.

Bitcoin is extending losses below $27,000...

And Ethereum accelerated below $1900...

Binance own token BNB is plunging...

Additionally, Bloomberg reports that Binance’s payments partner in Australia had abruptly cut it off, meaning local customers couldn’t deposit Aussie dollars on the platform via bank transfer.

The hit to business was immediate, with Binance halting all Aussie trading pairs about two weeks later, along with bank withdrawals of the local currency. 

Add one more headache to the swelling list of challenges facing Richard Teng, the civil servant-turned-crypto executive who’s seen as a possible heir to Binance’s embattled chief executive officer, billionaire Changpeng “CZ” Zhao.

Binance still handles more trading than all other top centralized crypto exchanges combined, yet never has its position seemed so precarious.

Binance regained a bit of market share in May??

Overall, volumes are way down since the start of the year, ever since the exchange halted its zero fee #BTC trading program. pic.twitter.com/hgMSHbgOry

— Kaiko (@KaikoData) June 1, 2023

In a tweet, Zhao said Binance hadn’t seen the complaint and would respond once it did.

“Our team is all standing by, ensuring systems are stable, including withdrawals, and deposits,” he added, referring to the possibility of customers pulling funds.

Authored by Mike Shedlock via MishTalk.com,

Here's a Tweet that caught my eye regarding the "fundamental problem" in China. What about the US and EU?

Fundamental Problem in China

"The fundamental problem — that Chinese people paid excessive prices for real estate because they thought the price would always go up — remains. And that means that someone will eventually have to take the losses."@Noahpinionhttps://t.co/I7m7fd3eWc

— Michael Pettis (@michaelxpettis) June 3, 2023

"The fundamental problem — that Chinese people paid excessive prices for real estate because they thought the price would always go up — remains. And that means that someone will eventually have to take the losses."

Someone Will Have to Take the Losses

Noah accurately comments that "someone will eventually have to take the losses." 

In China, the government refuses to support consumption. Instead, it repeatedly turns to real estate and exports for growth, pilling on losses upon losses in State Owned Enterprises (SOEs).

In the US we have commercial real estate problems, overprices houses, and  overpriced equities. 

Someone will have to take the losses, notably pension plans that are massively underfunded despite three consecutive stock market bubbles. 

But is That the Fundamental Problem?

Hardly. The fundamental problem everywhere is an unsound currency system that promotes bubbles as a means of growth. 

The fundamental problem propagates differently in different place.

China has massive property bubbles. The US has untenable deficit spending issues and many bubbles, yet, still tries to be the world's policeman, while weaponizing the US dollar on top of it all.

In the EU, Germany and Northern Europe largely dictate what happens in a core vs periphery issue.

The EU has an additional problem: The Maastricht treaty, the EMU, and EU  rules make it nearly impossible to fix anything without unanimous consent of all the nations involved.  

Central banks everywhere are guilty of promoting bubbles and busts of increasing amplitude. 

The Fundamental Problem

The fundamental problem is best viewed as a combination of unsound currencies, unsound central bank policies, and unsound fiscal policies that manifest in different ways in different countries.

But every country has the same thing in common: "someone will eventually have to take the losses." 

That we are in such a quagmire over that unavoidable truth is not the problem. It's a symptom of the primary underlying problem, unsound currencies, everywhere.

Global Japanification and a Currency Crisis on Deck

A fundamental strength of capitalism is ability to succeed and fail. 

We do not have capitalism when central banks and governments act to prevent losses. Nonetheless, the losses and distortions continue to mount or are papered over at taxpayer expense.

Japanification of the global economy has largely been the result, more so in Japan and the EU, than the US. Japanification of China is happening now.

A currency crisis of some sort awaits, as every country, but in different ways, is hell bent on preventing someone from taking the losses.

I think that the crisis starts outside the US. Likely places include Japan, China, or the EU, but it could start anywhere. 

Dollar Weaponization Will Speed Up the Crisis

One thing I am certain about is dollar weaponization by the Fed will speed up the timeline.

For discussion, please see Dollar Weaponization Expands - FDIC Message to Foreign Depositors Is Don't Trust the US

Also see Central Banks Are Buying Gold at Record Pace, What Does That Mean for Inflation?

Just don't expect immediate results. We have been on an unsustainable path for decades. 

Don't underestimate the willingness or ability of central banks to kick the can down the road. No one knows when, or what the trigger will be. 

Do expect more global Japanification.

*  *  *

Please Subscribe to MishTalk Email Alerts.

One day before the January 6th riot, then-President Donald Trump suggested to Defense Secretary Christopher Miller; "You're going to need 10,000 people" to secure the Capitol from protesters challenging the results of the 2020 election.

“And [Trump] goes, ‘You’re going to need 10,000 people.’ No, I’m not talking bullshit. He said that. And we’re like, ‘Maybe. But you know, someone’s going to have to ask for it.’” At that point Miller remembered the president telling him, “‘You do what you need to do. You do what you need to do.’ He said, ‘You’re going to need 10,000.’ That’s what he said. Swear to God.”-Vanity Fair

Now we learn that "people of interest" within the US intelligence community may have suppressed specific information forewarning of violence on that fateful day.

As Just the News reports, Rep. Barry Loudermilk (R-GA) - the lawmaker leading the investigation into security failures leading up to January 6th - said in a recent interview with Just the News that the Capitol Police intelligence unit had received a significant amount of detailed information in the weeks and days leading up to the event, that specific extremist groups planned to commit violence on Jan. 6, 2021.

"We do know that the security failure began with an intelligence failure," Loudermilk told JTN on Friday. "We have uncovered that there was significant intelligence that was provided to the intelligence division of the Capitol Police, starting in the beginning of December, all the way up through the morning of Jan. 6.

"Some of that intelligence actually laid out what the operational plan of some extreme groups were to enter the Capitol, take over Congress, even kill some Capitol police if they had to," he continued. "This made it to the Intelligence Division. But it never made it any further. Even the chief of Capitol Police was not made aware of that level of intelligence."

According to Loudermilk, his House Administration investigative subcommittee has made 'substantial progress' in identifying the specific individuals who may have suppressed or mishandled the intelligence.

"Who was involved in this? Was it one person that just squelched the intelligence? Was it just a massive failure? Was it because of incompetence, or was it somebody who purposely suppressed that intelligence?" he asked. "There's actually some people of interest that we're talking to, and we're looking into to see where that failure was."

Answering these questions is key to better protecting the Capitol in the future.

"The frontline officers, man, they fought valiantly that day," he said. "But they were ill equipped. They were not prepared, and none of them knew what was coming. But there were certain people in the Capitol Police that did."

Just the News reported last year that federal and local law enforcement partners sent Capitol Police significant intelligence warnings of violence days and weeks ahead of the Jan. 6 event, including specific threats by groups like Oath Keepers and Proud Boys and warnings that the tunnel system throughout the Capitol might be targeted. The warnings though did not get sent up the chain of command to Chief Sund.

And just three days after the Jan. 6 Capitol breach, one of the Capitol Police's top intelligence analysts sent a blistering email to supervisors, blowing the whistle on what he said was a failure to heed clear intelligence warning that right-wing rioters planned to storm the Capitol. -Just the News

"We analysts have been reporting for weeks that Patriot groups are commenting on social media their intentions to storm the U.S. Capitol with overwhelming numbers," wrote Eric Hoar in a Jan. 9, 2021 email to his bosses. "I don't know what was occurring behind the scenes, but I hope that information was briefed with the veracity it deserved, and not just a one-time Event Assessment."

Loudermilk is also looking into the Democrat-led J6 committee, and says he's found some shocking evidence that many of its public hearings were mismanaged.

"We found out in the in the documents that I acquired from the Jan. 6 committee is the written script of every member of the committee. Just like you would have on a teleprompter or if you memorize a script for a movie," he told JTN. "And so every single aspect of their hearings was scripted for a Hollywood type of emotional appeal to the American people."

He added that Republicans currently running the House committee are taking a different approach.

"We just recently had a hearing with the chief of the Capitol Police. There was nothing scripted about it," he said. "We did have certain questions that we wanted to ask, but each member had their questions. The chief wasn't given a script in advance. …  These hearings from the January 6 Select Committee were Hollywood productions."

The week after payrolls is almost always a bit quiet for data and this week DB's Jim Reid reminds us that we have the added kicker of a Fed that has started their media blackout period ahead of next week's FOMC which will be preceded by a key CPI print on Tuesday 13th, one day before the Fed decision.

At the moment markets price in around 22% chance of a hike next week and maybe CPI might be the main thing that shifts those odds towards a hike if the report is strong, according to Reid. If the Fed wants to communicate to the market one way  or another ahead of next week then well placed media stories might surface (so far Timiraos has been hinting at a pause/skip).

However before CPI that does seem unlikely as nothing will be 100% decided until then. We are are back to having a fair bit of uncertainly over the near-term Fed outlook though. After spending most of the 4-day shortened week last week  rallying around 25bps from the highest point post-SVB, 2yr US notes sold off +16bps on Friday after a strong headline payroll number that seemed to mask some notable weakness under the surface in the report. The headline increased +339k (+195k expected) with +94k of revisions over the last two months. However hours worked ticked down a tenth to 34.3hrs, which marks the lower end of the pre-covid range, and unemployment ticked up three-tenths to 3.7% via the household survey that showed employment falling by 310k with a 440k increase in unemployment. The household part of the report can be more volatile so caution is required. Adding to the confusing nature of the report, average hourly earnings came in at 4.3% YoY (vs 4.4% expected), still too high for comfort for the Fed but ticking lower.

Next up on the agenda, and as we detailed in "Liquidity To Collapse $1 Trillion In "3 Or 4 Months", Pushing Economy Into The Abyss", with the debt ceiling deal signed into law over the weekend, watch for a dramatic rebuild in the US TGA (Treasury General Account) over the next few weeks and months. This starts this week with T-bill issuance that DB’s Steven Zeng suggests could in net terms hit $400bn in June and cumulatively $800bn by the end of August and $1.3tn by year-end. If you’re on the bearish side this deluge could drain liquidity in financial markets but if you’re more sanguine you would say it will just reshuffle money away from money market funds and equivalents (so far no money has left MMFs which are at all time highs).

In data terms, the quiet week ahead will be headlined by today's global services PMIs and the US ISM and factory orders prints, both of which disappointed (see here and here). Other highlights will be US factory orders (today) and US trade and consumer credit (Wednesday).

Over in Europe, key data releases for Germany include the trade balance today, factory orders tomorrow and industrial production on Wednesday. Elsewhere in the region, notable releases include the trade balance for France on Wednesday, retail sales for the Eurozone tomorrow and industrial production for Italy on Friday. In Asia, Japanese wages tomorrow and China CPI on Friday will be the highlights.

In terms of central banks, the RBA meet tomorrow with markets pricing in around a 30% chance of a hike with a full hike cumulatively priced in by the August meeting after recent hot inflation numbers. DB economists have now moved to price in a 25bps hike tomorrow, August and September now. The Bank of Canada meet the following day with markets pricing a one-in-three chance of a hike with economists closer to 50/50.

Courtesy of DB, here is a day-by-day calendar of events

Monday June 5

• Data: US May ISM services, April factory orders, China May Caixin services PMI, UK May official reserves changes, new car registrations, European wide May services PMI, Germany April trade balance, Eurozone April PPI

Tuesday June 6

• Data: UK May construction PMI, Japan April labor cash earnings, household spending, Germany May construction PMI, April factory orders, Eurozone April retail sales, Canada April building permits
• Central Banks: ECB Consumer Expectations Survey

Wednesday June 7

• Data: US April trade balance, consumer credit, China May trade balance, foreign reserves, Japan April leading index, coincident index, Italy April retail sales, Germany April industrial production, France April trade balance, current account balance, Canada Q1 labor productivity, April international merchandise trade
• Central Banks: BoC rate decision, ECB's Guindos and Panetta speak

Thursday June 8

• Data: US Q1 household change in net worth, April wholesale trade sales, initial jobless claims, UK May RICS house price balance, Japan May Economy Watchers survey, bank lending, April trade balance, current account balance, France Q2 total payrolls

Friday June 9

• Data: China May CPI, PPI, Japan May M2, M3, Italy April industrial production, Canada Q1 capacity utilization rate, May jobs report

Finally, looking at just the US, Goldman writes that the key economic data release this week is the ISM services report on Monday. Fed officials are not expected to comment this week given the blackout period leading up to the FOMC meeting June 13-14.

Monday, June 5

• 09:45 AM S&P Global US services PMI, May final (consensus 55.1, last 55.1)
• 10:00 AM Factory orders, April (GS +1.0%, consensus +0.8%, last +0.4%); Durable goods orders, April final (last +1.1%); Durable goods orders ex-transportation, April final (last -0.2%); Core capital goods orders, April final (last +1.4%); Core capital goods shipments, April final (last +0.5%)
• 10:00 AM ISM services index, May (GS 53.0, consensus 52.6, last 51.9): We estimate that the ISM services index rebounded by 1.1pt to 53.0 in May. Our forecast reflects the rebound in our GSAI, favorable seasonality, and a modest improvement in other business surveys on net (services tracker +0.1pt to 50.2). The lack of negative news on the banking sector in recent weeks also argues for sequential improvement.
• 01:30 PM Cleveland Fed President Loretta Mester (FOMC non-voter) speaks: Cleveland Fed President Loretta Mester will deliver welcome remarks at an event for the Council for Economic Education hosted by the Cleveland Fed. Mester is not expected to comment on monetary policy given the blackout period.

Tuesday, June 6

• No major data releases scheduled.

Wednesday, June 7

• 08:30 AM Trade balance, April (GS -$74.0bn, consensus -$75.4bn, last -$64.2bn): We estimate that the trade deficit widened by $9.8bn to $74.0bn in April.

Thursday, June 8

• 08:30 AM Initial jobless claims, week ended June 3 (GS 225k, consensus n.a., last 232k); Continuing jobless claims, week ended May 27 (consensus N.A., last 1,438k); We estimate initial jobless claims declined to 225k in the week ended June 3.
• 10:00 AM Wholesale inventories, April final (consensus -0.2%, last -0.2%)

Friday, June 9

• No major data releases scheduled.

Source: DB, Goldman, BofA

Did Ukraine forces just attempt to kick off their much anticipated major counteroffensive, only to have it put down immediately after it began? 

That's what the Russian Defense Ministry (MoD) suggested early Monday in announcing that Ukraine began a "large-scale offensive" in mounting attacks along five sections of the frontlines in the eastern Donbas region. But Russia said it thwarted the major attack and that some 250 Ukrainian troops were killed, which included Ukraine sending six mechanized and two tank battalions to Russian-controlled southern Donetsk.

"On the morning of June 4, the enemy launched a large-scale offensive in five sectors of the front in the South Donetsk direction," the MoD statement began. "The enemy has failed to reach its goals and was unsuccessful."

It added that in total the attacking forces lost six tanks, three infantry vehicles, and 21 armored vehicles in what would mark a significant defeat if confirmed. "The enemy’s goal was to breach our defenses in what they assumed was the most vulnerable section of the frontline," the Russian military statement continued. 

"During the day, the occupiers made 23 attacks, but all of them were repulsed by units of the defense forces," the MoD continued, in reference to attacks also along front lines of Luhansk, Zaporizhia and Kherson.

The ministry further specified that Russian Chief of the General Staff Valery Gerasimov "was at one of the forward command posts" at the time of the thwarted attacks. 

While Ukrainian President Volodymyr Zelensky just days ago said that his forces stand 'ready' to launch a counteroffensive, he made not mention of the alleged assault Sunday night when he gave his nightly video address.

BBC has remained very skeptical of the Russian military narrative, and yet Kiev has admitted some degree of "offensive actions" Sunday into Monday:

But on Monday Ukraine issued a statement denouncing Russian 'lies' and propaganda that aims to demoralize and mislead the Ukrainian public, but without directly referencing the specific Kremlin claims of a thwarted counteroffensive. According to Reuters: 

The commander of Ukraine's ground forces, Oleksandr Syrskyi, said on Monday that Ukrainian forces continued "moving forward" near the long-contested city of Bakhmut in northern Donetsk. He made no comment on the counter-offensive.

The daily report from Ukraine's General Staff said only that there were 29 combat clashes in the Donetsk and Luhansk regions of eastern Ukraine.

Ukraine's Centre for Strategic Communications did not address the Russian statement directly but said, without providing evidence, that Russia would seek to spread lies.

"To demoralize Ukrainians and mislead the community (including their own population), Russian propagandists will spread false information about the counteroffensive, its directions, and the losses of the Ukrainian army," it said.

Given the vague response from the Ukrainian side in the face of significant Russian claims which are currently grabbing world headlines, this for many observers is going to give credence to the Kremlin statements. 

Reuters in its Monday reporting noted the following: 

Ukrainian Defence Minister Oleksii Reznikov published a cryptic message on Twitter on Sunday, quoting Depeche Mode's track "Enjoy the Silence".

Ukraine’s intel operators appear to be taunting Russia here that the counteroffensive won’t be announced but could begin at any time…Ukraine’s Ambassador to the US @OMarkarova joins @FaceTheNation this morning. https://t.co/ftA0XL4Ra9

— Margaret Brennan (@margbrennan) June 4, 2023

As we detailed earlier, in recent days Ukrainian officials have been openly taunting Russia ahead of the offensive.

If the Russian MoD statements prove true, this marks disaster for the Ukrainian military, given a defeat at the very start of the counteroffensive would likely sap morale and momentum, given also already there have been widespread reports that inexperienced and untrained Ukrainians are being sent to the frontlines in droves amid mounting heavy casualties.  

"We are continuing the defense that we started on February 24, 2022. A defensive operation includes everything, including counteroffensive actions. Therefore, in some areas we are moving to offensive actions," Deputy Minister of Defense of Ukraine Hanna Maliar said. pic.twitter.com/MhAsw2LVa3

— NOELREPORTS ???? ???? (@NOELreports) June 5, 2023

Meanwhile, there does appear to be some degree of confirmation from Ukrainian officials trickling out that "offensive actions" have indeed begun in various sectors.

But Ukraine’s deputy defense minister is seeking to stress that Russia is putting out claims of beating back the counteroffensive in order to "divert attention from the defeat" in locations near Bakhmut.