Pradeep Thomas Thundiyil/iStock Editorial via Getty Images May’s flash PMI survey data show the eurozone economy taking an increasingly severe toll from the war in the Middle East. Output has now contracted for two successive months, job losses have become more widespread, and the region’s supply shock from the war is intensifying. Supply shortages threaten not only to constrain growth in the comi...
Pradeep Thomas Thundiyil/iStock Editorial via Getty Images May’s flash PMI survey data show the eurozone economy taking an increasingly severe toll from the war in the Middle East. Output has now contracted for two successive months, job losses have become more widespread, and the region’s supply shock from the war is intensifying. Supply shortages threaten not only to constrain growth in the coming months but also have the potential to add further upward pressure to inflation, which the survey price gauges already hint at rising sharply in the coming months. Combined with the growing signs of the region slipping into an economic downturn, the coming inflation spike creates a deepening dilemma for policymakers. Output falls at fastest rate since October 2023 The Eurozone PMI, compiled by S&P Global, has moved deeper into contraction territory in May, according to the early ‘flash’ estimate. The PMI posted 47.5, down from 48.8 in April and below the 50.0 no-change mark for a second successive month. The latest reading signalled the sharpest downturn for just over two and a half years and indicates that the euro area economy looks set to contract by 0.2% in the second quarter. French firms signalled a particularly marked reduction in output during May, reporting the largest drop in output since November 2020, but business activity also decreased in Germany and across the rest of the eurozone as a whole. Service sector contracting at steepest rate since 2021 The service sector is being hit especially hard by the surge in the cost of living created by the war, notably via the demand-sapping impact of higher energy prices. However, consumer-oriented sectors such as travel and tourism are also being affected by the war, and financial services firms have noted the damaging impact of higher interest rate expectations. May consequently saw service sector activity decrease at the fastest pace since the COVID-19 disruptions in February 2021. Manufacturing aided by stockpiling ...
MF3d/iStock via Getty Images Animal spirits have been soaring in the area of artificial intelligence (AI), and the surge in spending has shown up in the figure above. It shows the fixed investment in information technology equipment and software as a percentage of GDP (ends in 2026Q1). The last two quarters of data saw a surge of about 0.4% of GDP. This is certainly impressive, although the impact...
MF3d/iStock via Getty Images Animal spirits have been soaring in the area of artificial intelligence (AI), and the surge in spending has shown up in the figure above. It shows the fixed investment in information technology equipment and software as a percentage of GDP (ends in 2026Q1). The last two quarters of data saw a surge of about 0.4% of GDP. This is certainly impressive, although the impact on GDP may be less than what the above figure suggests due to the associated rise in imported silicon chips - buying foreign equipment to invest locally improves the capital stock but does not represent a rise in domestic production. (The exporting country is producing the goods.) This relates to one of the perennial online economics debates: do imports subtract from GDP? In addition to the statement “imports subtract from GDP” being mathematically correct, the cancellation of domestic spending does matter: there is a financial cost associated with buying foreign goods, and that financial cost can displace spending that would have been made on domestic production. For more information, the article , Tracking AI’s Contribution to GDP Growth, by Hannah Rubinton and Bontu Ankit Patro of the Saint Louis Federal Reserve, gives a more detailed breakdown of the effects of AI spending on growth. From a quick survey of publicly available research, there are arguments that the AI boom added 1% to American GDP growth, which is consistent with the linked paper (and the chart above). This helped insulate the U.S. economy from tariff shenanigans. I have no real expertise nor interest in forecasting the future of the AI industry relative to other sectors of the economy. My interests are on the macro side, and my feeling has been that this has been a sectoral boom. This matters a lot to the people, firms, and investors involved, but the number of people involved is a limited slice of the population. This is different from the 2000s housing boom - there are a lot of homeowners, and constru...
Key Points These two biotechs have important clinical catalysts on the horizon. Although their shares could soar over the next few years, they are fairly risky stocks. 10 stocks we like better than Abivax Société Anonyme › The famously volatile biotech industry can help investors earn substantial returns in relatively short periods, so long as they pick the right companies. Take Abivax (NASDAQ: AB...
Key Points These two biotechs have important clinical catalysts on the horizon. Although their shares could soar over the next few years, they are fairly risky stocks. 10 stocks we like better than Abivax Société Anonyme › The famously volatile biotech industry can help investors earn substantial returns in relatively short periods, so long as they pick the right companies. Take Abivax (NASDAQ: ABVX) and Viking Therapeutics (NASDAQ: VKTX), two biotechs that have grown in prominence in recent years. These two drugmakers could see their shares double over the next four years -- for a compound annual growth rate of about 19% -- provided they can make significant headway with their leading pipeline candidates. Here's the rundown. Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue » 1. Abivax Abivax is a clinical-stage biotech developing a promising product called obefazimod. This drug could enter the market for ulcerative colitis (UC) medicines if it earns approval. Although it is a highly competitive area, obefazimod has shown tremendous potential so far. Unlike some traditional immunosuppressants used to treat UC, which leave patients vulnerable to various infections, obefazimod does not broadly weaken the immune system. Obefazimod aced a phase 3 clinical trial in patients with moderate-to-severe UC, about 47.3% of whom had had inadequate responses to prior therapies. These results highlight the fact that obefazimod could be just as effective as its competitors (or even more so) while limiting side effects. That's why it looks so promising. But could Abivax's shares really soar by 2030, especially considering they have already gained significant value over the past two years? Potentially, yes, and that will depend on upcoming clinical and regulatory milestones. Abivax should release data from a phase 3 m...
You'll often hear that it's important to claim your Social Security benefits strategically because the monthly payment amount you lock in when you file is what the program will pay you for life. But that's not entirely true. Social Security benefits are eligible for an annual cost-of-living adjustment, or COLA. COLAs are meant to help Social Security benefits keep pace with inflation so seniors do...
You'll often hear that it's important to claim your Social Security benefits strategically because the monthly payment amount you lock in when you file is what the program will pay you for life. But that's not entirely true. Social Security benefits are eligible for an annual cost-of-living adjustment, or COLA. COLAs are meant to help Social Security benefits keep pace with inflation so seniors don't lose buying power over time. Social Security COLAs are based on third-quarter inflation changes. So it's too soon to know what next year's raise will look like. Still, recent inflation data could provide a clue as to what to expect from Social Security's COLA next year. Inflation readings point to a more generous COLA in 2027 Inflation has been creeping upward in the wake of the Iran conflict. Following April's Consumer Price Index, the Senior Citizens League, an advocacy group, raised its 2027 Social Security COLA projection from 2.8% to 3.9%. That's a pretty notable boost. And it would likely be meaningful for retirees who get most or all of their income from Social Security. Right now, the average monthly Social Security benefit is about $2,081. A 2.8% COLA would boost that benefit by about $58 a month. A 3.9% COLA, on the other hand, would result in a monthly bump of $81. However, it's important to recognize that it's too early to predict next year's COLA with certainty. So you shouldn't necessarily plan your 2027 budget around that estimate. Have limited expectations Even if Social Security's 2027 COLA ends up being 3.9%, you may not gain that much buying power from that raise. For one thing, that COLA will come at the cost of higher expenses, because that's just how COLAs work. But also, in 2026, the cost of Medicare Part B rose substantially. If that happens again in 2027, an increase in Part B could erode whatever COLA comes through, since those premiums are paid directly out of Social Security benefits. In fact, it's hard to factor any given Social Security COL...
Bloomberg Daybreak Europe is your essential morning viewing to stay ahead. Live from London, we set the agenda for your day, catching you up with overnight markets news from the US and Asia. And we'll tell you what matters for investors in Europe, giving you insight before trading begins. On today's show, the US says tolls on the Strait of Hormuz would be unacceptable, after Iran said it's working...
Bloomberg Daybreak Europe is your essential morning viewing to stay ahead. Live from London, we set the agenda for your day, catching you up with overnight markets news from the US and Asia. And we'll tell you what matters for investors in Europe, giving you insight before trading begins. On today's show, the US says tolls on the Strait of Hormuz would be unacceptable, after Iran said it's working with Oman to formalize its control of the Strait. Stocks have been resilient on optimism that a deal to end the war is on the horizon. But conflicting statements from the US and Iran saw Brent gaining after three days of declines. Kevin Warsh is due to be sworn in as Chair of the Federal Reserve, just as soaring Treasury yields cloud the outlook for interest rates. Today's guests: Modupe Adegbembo, Jefferies, Economist & Tobias Adrian, International Monetary Fund, Financial Counsellor and Monetary & Capital Markets Department Director. (Source: Bloomberg)