“I’m Just Here For The Cotton Candy”

By Michael Every of Rabobank

“I’m just here for the cotton candy”

Naturally, the market didn’t Fink about a new globalization yesterday. Rather, it fought on weaker US data: ADP employment 37K vs. 114K expected, ISM services 49 vs. 52. That apparently means “rate cuts!” again even as the ISM prices paid were 68.7 vs. 65.1. 

We have updated our Its chief negotiator added: “Iran has paid dearly for these capabilities, and there is no scenario in which we will give up on the patriots who made our dream come true… No enrichment, no deal. No nuclear weapons, we have a deal.” That sounds OK until one sees what the IAEA says Iran has done with enrichment: try to get nuclear weapons. One way or the other, this still looks explosive for markets eventually.

In trade, China said it may buy hundreds of Airbus jets from Europe, obviously playing it against the US and that trade and geopolitics are separate to it even as Beijing backs Russia vs. Ukraine.

US automakers are considering opening production lines in China to assure supplies of the vital raw earths without which Western supply chains will soon grind to a halt: those minerals are now being strictly embargoed by Beijing after China gained control of them all years ago as western economists said, “This is fine,” while drinking coffee. Yet today those US auto firms will then face US tariffs that make economists spit their coffee.

The EU said talks with the US are moving in the “right direction” as its chief trade negotiator asked D.C. to cooperate vs. the “real threat” on steel, China. That’s a stance the US has pushed Europe to take more generally – to no avail so far: and it has absolutely nothing to do with the sudden Chinese offer to buy hundreds of Airbuses. Honest.

Summing things up, Trump posted that Xi Jinping is very hard to deal with on trade.

In politics, Elon Musk urged Americans to contact their lawmakers to “KILL” Trump’s Big Beautiful Bill. The CBO said the BBB will add $2.4 trillion to federal debt over a decade; that’s as Trump backed removing the debt ceiling; and Steve Bannon –again– said the only true fiscal solution now is to tax the rich more.

pic.twitter.com/b15EQ9l0nD

— Elon Musk (@elonmusk) June 4, 2025

The White House said Columbia University no longer meets its standards for accreditation due to its inaction on antisemitism, a huge blow to it; and Trump ordered a travel ban from Afghanistan, Burma, Chad, Republic of the Congo, Equatorial Guinea, Eritrea, Haiti, Iran, Libya, Somalia, Sudan and Yemen, with partial restrictions from Burundi, Cuba, Laos, Sierra Leone, Togo, Turkmenistan, and Venezuela.

Meanwhile, as the EU looks in shock at the US, former French PM and Brexit negotiator Barnier accused EC Commission President Von der Leyen of a drift to authoritarianism, just after she won the Charlemagne European prize for successfully handling “crises of historic proportions”.

In markets, oil dipped as Saudi Arabia flagged it wants to get more aggressive on OPEC+ supply (and its own market share) – which hurts Russia (and to a lesser extent, Iran).

Yet the Fed’s Beige Book pointed to slowing US growth and rising prices, so stagflation. Moreover, Fed whisperer @NickTimiraos underlined the BLS –which will soon discontinue the calculation and production of many indices for PPI data– hasn’t had the resources to collect data from two (soon to be three) metros used for CPI. Who needs ‘accurate’ inflation numbers, eh? 

Trump also attacked the Fed for not cutting rates fast enough: “ADP NUMBER OUT!! ‘Too Late’ Powell must now LOWER THE RATE… He is unbelievable!!! Europe has lowered NINE TIMES!” Markets might shrug but we get a new Fed Chair in under a year: there might need to be some new Fink-ing at that point, if not well beforehand.

Tyler Durden Thu, 06/05/2025 – 11:40

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