May 7 2024
King dollar
FLASH Bernie Sanders, 82, to seek 4th Senate term
1 Strong dollar hurts US exports
2 E-commerce helps brick-and-motor stores
3 Affluent older Americans driving US economy
4 Israel prepares to escalate war as peace talks falter
5 Xi visits Europe, seeking strategic opportunity
5/7/1915 German submarine sinks Lusitania
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1 Strong dollar hurts US exports
Every major currency in the world has fallen against the U.S. dollar this year, an unusually broad shift with the potential for serious consequences across the global economy. Two-thirds of the roughly 150 currencies tracked by Bloomberg have weakened against the dollar, whose recent strength stems from a shift in expectations about when and by how much the Federal Reserve may cut its benchmark interest rate, which sits around a 20-year high. High Fed rates, a response to stubborn inflation, mean that American assets offer better returns than much of the world, and investors need dollars to buy them. In recent months, money has flowed into the United States with a force that’s being felt by policymakers, politicians and people from Brussels to Beijing, Toronto to Tokyo.
There can be benefits for some foreign businesses, however. A strong dollar benefits exporters that sell to the United States, as Americans can afford to buy more foreign goods and services (including cheaper vacations). That puts American companies that sell abroad at a disadvantage, since their goods appear more expensive, and could widen the U.S. trade deficit at a time when President Biden is promoting more domestic industry.
NYT
2 E-commerce helps brick-and-motor stores
Store owners once viewed e-commerce as a mounting threat to their survival. Now, more bricks-and-mortar stores are thriving after integrating their properties with the online shopping experience. Shoppers browse in person to see, touch or try on items before ordering them online. They are picking up or returning purchases in stores. And retailers are increasingly relying on their shops as fulfillment hubs, shipping items ordered online from store stockrooms in addition to warehouses. Overall, nearly 42% of e-commerce orders last year involved stores, up from about 27% in 2015, according to research firm GlobalData.
WSJ
3 Affluent older Americans driving US economy and delaying need for Fed rate cuts
Older Americans like Harris are fueling a sustained boost to the U.S. economy. Benefiting from outsize gains in the stock and housing markets over the past several years, they are accounting for a larger share of consumer spending — the principal driver of economic growth — than ever before. And much of their spending is going toward higher-priced services like travel, health care and entertainment, putting further upward pressure on those prices — and on inflation. Such spending is relatively immune to the Federal Reserve’s push to slow growth and tame inflation through higher borrowing rates, because it rarely requires borrowing. Affluent older Americans, if they own government bonds, may even be benefiting from the Fed’s rate hikes. Those hikes have led to higher bond yields, generating more income for those who own such bonds.
AP
4 Israel prepares to escalate war as peace talks falter
The Biden administration’s intensive public and private campaign to forestall Israel’s assault on Rafah has become its toughest test to date with its Middle East ally. Hours after President Biden on Monday warned Israeli Prime Minister Benjamin Netanyahu against a full-scale assault on Rafah, Israel’s military conducted what it called targeted airstrikes in the eastern part of the city and sent in tanks as it seized the enclave’s border crossing with Egypt. The Israeli attack signaled the wide gulf between Biden and Netanyahu over a strategy for securing the release of hostages held by Hamas and ultimately bringing the fighting to an end. So far the White House has neither achieved a cease-fire between Hamas and Israel nor persuaded Netanyahu to defer the Rafah offensive. Hamas said Monday that it had accepted a temporary cease-fire. The U.S. said it was reviewing the Hamas response while Israel complained the group had introduced new conditions. Hamas’s claim to have accepted the cease-fire appeared more like a counteroffer, one aimed at putting the onus for impeding the pause on Israel. And Israel’s attack in Rafah likewise may have been a negotiating tactic, intended at least in part at driving home to Hamas the costs of not reaching a deal to release hostages.Since his wartime trip to Israel following Hamas’s Oct. 7 surprise attack, President Biden has emerged as one of the country’s strongest supporters. Billions of dollars in American weaponry have flowed to Israel, and the U.S. has repeatedly defended Israel’s right to defend itself—a “bear hug” strategy that U.S. officials hoped would enable Washington to work behind the scenes to influence Israeli leaders’ calculations.
WSJ
5 Xi visits Europe, seeking strategic opportunity
Chinese President Xi Jinping is visiting France, Serbia, and Hungary for his first trip to Europe in five years, which could potentially weaken European ties with the U.S. and promote a new global order less dominated by American influence. Amid heightened tensions regarding China’s support for Russia and surveillance concerns, Xi’s visit symbolizes China’s growing influence in Europe. This trip tests Europe’s ability to balance its relationships with China and the U.S. Xi has timed his arrival at his second stop, Serbia, to coincide with the 25th anniversary of the deadly NATO bombing of the Chinese Embassy in Belgrade during the Kosovo war. Hungarian Prime Minister Viktor Orban has backed enormous Chinese investment and used his country’s position as a European Union member to dilute criticism of China.
Cipher Brief
5/7/1915 German submarine sinks Lusitania
On the afternoon of May 7, 1915, the British ocean liner Lusitania is torpedoed without warning by a German submarine off the south coast of Ireland. Within 20 minutes, the vessel sank into the Celtic Sea. Of 1,959 passengers and crew, 1,198 people drowned, including 128 Americans. The attack aroused considerable indignation in the United States, but Germany defended the action, noting that it had issued warnings of its intent to attack all ships, neutral or otherwise, that entered the war zone around Britain.
It was revealed that the Lusitania was carrying about 173 tons of war munitions for Britain, which the Germans cited as further justification for the attack. The United States eventually sent three notes to Berlin protesting the action, and Germany apologized and pledged to end unrestricted submarine warfare. In November, however, a U-boat sank an Italian liner without warning, killing 272 people, including 27 Americans. Public opinion in the United States began to turn irrevocably against Germany.
Sources
[2]https://www.wsj.com/business/retail/online-shopping-brick-mortar-stores-d7232016?mod=hp_lead_pos6
[3]https://apnews.com/article/9290216e89cbd7a3a0d2be66041aeaf8
[5]Cipher Brief
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