Cooling Consumer Spending Points to Further Economic Slowdown Household spending in May rose at the slowest rate this year. Some economists see a second-straight quarterly contraction.

Consumer spending cooled to a 0.2% advance in May, the Commerce Department said Thursday. That was the smallest monthly gain this year, and down from the revised 0.6% increase in April [from +0.9%].

Following the soft spending figures, economists at S&P Global Market Intelligence said they forecast gross domestic product to contract at a 0.7% annual rate in the second quarter, which ends Thursday. They previously forecast very slight economic growth. (…)

Thursday’s report showed personal income grew by 0.5% in May, the same as April’s rate. Adjusted for inflation, after-tax income declined by 0.1% in May, showing that wage increases have been struggling to keep up with price rises. Inflation-adjusted spending declined by 0.4% in May, the first decline in real spending since December.

The personal-consumption expenditures price index, an inflation gauge closely watched by the Federal Reserve, rose 6.3% in May from a year earlier, the same as April’s annual rate. Core inflation, which strips out volatile food and energy components, rose 4.7% in May on an annual basis and has been declining since February when it was 5.3%. (…)

In May, the saving rate rose modestly to 5.4%, after the rate fell to its lowest level in more than a decade in April. (…)

Spending on long-lasting goods fell by 3.2% from the prior month, but spending on non-durable goods—including gasoline—rose 0.7%, a sign that consumers are putting off big-ticket purchases in favor of more immediate needs and services spending, which also rose 0.7% over the prior month. (…)

The BEA revised back to January. Disposable income was unchanged but real expenditures were revised sharply lower: Jan-April went from +2.8% to +1.9% with Mar-Apr growth cut in half from +1.2% to +0.6%. Given May’s -0.4%, real spending grew only at a 0.6% annualized rate in the last 4 months against real DPI down 0.6% a.r..

Real expenditures on goods were down 1.6% in May after +0.3% (from +1.0%) in April. Real services were revised down every month this year, from +0.6% on average to +0.4% Jan. to Apr. and to +0.3% in May.

In effect, services are not the assumed offset. Real consumption is 4% above real income. These two line will meet again and real income is showing no upward trend lately, is it?

The only positive is that core inflation has stabilized at +0.3% for the 4th consecutive month. Quite encouraging. Durable goods inflation has been zero over the last 4 months while services prices are steadily up 4.9% annualized.

Meanwhile, the wages and salaries component of personal income has been decelerating from +8.7% annualized in the last 4 months to +6.6% in the last 2 months and +6.0% in May. Goldman Sachs estimates that wage growth needs to slow to 3.5% for the Fed to reach its 2% inflation target. At this time, inflation in the 3-4% range looks like a more achievable level

While on demand for services:

• Las Vegas May 2022: Visitor Traffic Down 6.6% Compared to 2019
• Hotels: Occupancy Rate Down 4.1% Compared to Same Week in 2019

U.S. Unemployment Claims Edged Down

Initial claims for unemployment insurance filed in the week ended June 25 declined by 2,000 to 231,000 (-43.0% y/y) from 233,000 in the previous week (revised up from 229,000). Weekly claims have been trending up modestly over the past few months but remain historically quite low and still indicative of tight labor-market conditions. The Action Economics Forecast Survey had expected 230,000 claims for the latest week. The four-week moving average of initial claims rose to 231,750 from 224,500 in the prior week.

Amid all the claims that the economy is strong and that the labor market is so tight, unemployment claims are rising. Nowhere near the pandemic levels but, at its current 232k, the four-week moving average of initial claims is up 35% from its April 2 low and is back to its pre-pandemic range.

MANUFACTURING PMIs

U.S. PMIs are out later today.

Eurozone: Manufacturing output falls for first time since depths of initial COVID-19 lockdowns in 2020

June PMI® survey data showed the eurozone manufacturing economy ending the second quarter on a low as production levels fell for the first time in two years. Evidence of worsening conditions for goods producers was seen across many of the sub-indices of the latest PMI survey as total new business intakes and export orders both declined, while business confidence slid to a 25-month low. Backlogs of work, which have been built up significantly throughout the pandemic, also fell for the first time in almost two years as companies focused on completing unfilled orders due to falling demand.

Elsewhere, there were further tentative signs of supply chains edging closer to stability as input lead times lengthened to the least marked extent in a year-and-a-half. There was also a softening of inflationary pressures as both input costs and output prices rose at slower rates.

The S&P Global Eurozone Manufacturing PMI® fell from 54.6 in May to 52.1 in June, its lowest reading since August 2020 and a fifth consecutive month of decline in the headline measure.

The slowdown trend seen across the euro area on aggregate reflected a broad-based weakening across all the monitored constituent nations during June. The best-performing country was once again the Netherlands, although growth here slumped to a 19-month low. Compared to May, Austria registered the sharpest slowdown, with its respective Manufacturing PMI falling by over 5 index points. The weakest-performing nation was Italy, which registered its softest upturn in two years.

For the first time since the initial wave of COVID-19 infections in the first half of 2020, June survey data highlighted a decline in eurozone manufacturing output. Weaker demand conditions, the war in Ukraine and persistent supply issues were cited as reasons for lower production.

Another drop in new orders was recorded in June. The rate of decline gathered pace and was the strongest since May 2020. A general slowdown in demand for goods was mentioned by survey respondents, although many commented on the reluctance of clients to place new orders at current price levels. Weakness was also seen in export flows during June as overseas new business fell for a fourth consecutive month.

There was also growing evidence of businesses looking to control costs as purchasing activity rose at the slowest rate across the current 22-month sequence of growth. A preference to use existing stocks, which firms have aggressively built up in recent months to mitigate supply issues and inflation, was also commonly mentioned.

However, there were signs, albeit limited, of supply-chain conditions stabilising, with the survey’s measure of delivery times rising to an 18-month high. Overall, this signalled the fewest incidences of delivery delays since December 2020.

The receipt of previously-ordered items supported continued stockpiling efforts, despite the marked slowdown in purchasing activity growth. Input stocks rose at the fastest rate in five months during June.

For the first time in just shy of two years, euro area manufacturers made inroads into their backlogs of work during June, with faltering demand conditions leading firms to turn their attention to incomplete orders. Employment growth meanwhile slowed to a three-month low.

There was a notable loss of confidence across the euro area manufacturing sector in June. Overall, business sentiment fell to its weakest level since May 2020 as concerns surrounding the global economic outlook and inflation weighed on growth expectations.

Lastly, there was a modest cooling of inflationary pressures in June. Increases in both input costs and output charges were slower when compared to May, with rates of inflation easing to 15- and six-month lows respectively. Nevertheless, price pressures remained historically elevated.

China: Manufacturing output rebounds as pandemic restrictions recede

The reduction in COVID -19 case numbers and subsequent easing of containment measures across China led to a renewed improvement in manufacturing business conditions in June. Output expanded sharply as disruption to operations receded, with the rate of growth the quickest seen for just over a year-and-a-half. New orders and new export sales also returned to growth, though rates of expansion were modest overall. Supply chains were meanwhile broadly stable, which ended a two-year streak of worsening lead times. While firms registered a further marked increase in input costs, prices charged were cut once again as part of efforts to attract sales.

The headline seasonally adjusted Purchasing Managers’ Index™ (PMI™) increased from 48.1 in May to 51.7 in June, to signal the first improvement in the health of the sector for four months. Though modest, the rate of increase was the strongest seen since May 2021.

Chinese manufacturers registered the first expansion of output since February at the end of the second quarter. The rate of growth was the quickest seen since November 2020 and sharp, with a number of firms linking the rise to the return to more normal operations and reopening of production lines as COVID-19 restrictions were eased.

Total new orders likewise returned to growth in June, though the rate of increase was only modest. A number of firms mentioned that the lingering impact of the pandemic and relatively subdued demand conditions had impacted new order intakes. New export business also rose modestly.

The return to more normal business conditions also helped to alleviate pressure on supply chains, as highlighted by a broad stabilisation of vendor performance in June. Notably, this ended a 24-month period of lengthening delivery times for inputs.

Although companies saw a rebound in activity in June, they remained relatively cautious in terms of staffing levels. Employment declined for the third month in a row, albeit modestly, with a number of firms linking this to the non-replacements of voluntary leavers as new business intakes were relatively subdued. Furthermore, there appeared little pressure on operating capacities as production schedules resumed, with companies registering a renewed fall in backlogs of work in the latest survey period.

Reflective of the trend seen for new orders, purchasing activity rose modestly in June. Inventories of purchased inputs expanded only fractionally, and stocks of finished goods fell marginally, as some companies were reluctant to build inventories in light of relatively muted demand conditions.

Higher costs for raw materials and transport drove a further sharp increase in input costs in June. Nonetheless, companies cut their selling prices for the second month in a row amid greater market competition and efforts to stimulate sales.

Business confidence regarding the 12-month outlook for output improved to a four-month high in June. Companies were generally upbeat in their forecasts as they anticipated further increases in production as the pandemic recedes and further improvements in client demand.

Japan: Manufacturing sector expands at softer pace in June

Businesses in the Japanese manufacturing sector signalled a further improvement in operating conditions in June, though the rate of expansion eased from that seen in May. Companies often noted that rising costs and sustained material shortages contributed to a slower rise in production levels, while new orders rose only fractionally. Ongoing supply chain disruption and delivery delays led to a further rapid increase in costs, resulting in a sharp increase in factory gate prices that was the quickest in the survey history. That said, firms were increasingly confident that these issues would dissipate in the year ahead, as the level of business confidence rose to the highest since March.

The headline au Jibun Bank Japan Manufacturing Purchasing Managers’ Index™ (PMI) dipped from 53.3 in May to 52.7 in June. This indicated a seventeenth consecutive monthly improvement in the health of the sector, although the pace of expansion was the joint-softest since last September.

The weaker headline reading was partly due to a near-stagnation of new orders. While remaining in expansion territory, the latest increase in sales was only fractional and the slowest in the current nine-month sequence of growth. The slowdown in demand was commonly linked to rising prices and weaker client confidence amid sustained material shortages and delivery delays. Firms also noted a reduction in new export sales in June for the fourth consecutive month, although the decline was only modest, as persistent weakness in China due to lockdowns were partially offset by stronger demand in North America.

Production growth also slowed in June. The rate of expansion was only marginal and the slowest recorded in four months. Firms noted that material shortages and surging prices had weighed on output volumes.

Japanese manufacturers indicated a rise in cost burdens for the twenty-fifth consecutive month in June. That said, the rate of input cost inflation eased for the first time in four months and was the slowest since February, albeit still rapid overall. Rising input prices were widely attributed to higher raw material costs and a weaker yen which also made imported material more expensive. Nonetheless, manufacturers often sought to pass higher costs on to customers through higher output charges, which rose at the fastest rate in the survey history.

Buying activity rose for the ninth time in as many months in June. Growth eased to the slowest in this sequence, however, and was only modest, as attempts to secure additional raw materials were hindered by delivery delays, material shortages and higher prices. As a result of additional purchases, firms built up their stocks of raw materials and finished items to protect against future disruption and price rises, with stocks of finished items rising for the first time since January. Suppliers’ delivery times meanwhile lengthened at the slowest rate for four months, albeit still rapidly overall.

Concurrently, employment levels continued to increase in June, with the rate of job creation broadly unchanged from May’s modest pace. In line with the trend for new orders, outstanding business also rose at a softer pace. A number of monitored firms attributed the latest accumulation in backlogs to material shortages.

Looking ahead, business confidence regarding output over the coming year remained robust. The degree of optimism strengthened to a three-month high amid hopes that supply chain disruption and inflationary pressures will diminish, and that the pandemic will subside globally.

S&P Global PMIs for other Asian countries tell the same story: the goods economy is in a major slowdown as contracting new orders will gradually lad to lower production rates and reduced employment:

• However, after a modest increase in the previous survey period, ASEAN manufacturing firms noted a drop in new business from abroad.
• [Taiwan] Manufacturers signalled a back-to-back monthly fall in overall new work in June. Though modest, the rate of decline was the quickest seen since the initial onset of the pandemic in June 2020. Panellists often commented on reduced demand across both domestic and external client bases, which was in part driven by the pandemic, rising costs and difficulties shipping items. Furthermore, new export business fell at the steepest pace for two years.
• [South Korea] businesses recorded a softer rise in
  new orders in the latest survey period. Panellists often commented that client confidence was dampened by rising raw material prices in the midst of supply shortages. Foreign demand meanwhile contracted for the fourth consecutive month in June, although the rate of decline eased to the softest in this sequence.
• The Chicago PMI new orders index decreased to a contraction-level 49.9 this month from 59.7 in May and 67.0 last June, registering its first contraction since June 2020. The Chicago Business Barometer is considered to be a leading indicator of the U.S. economy.

Price pressures are abating; lower overall demand against jacked up inventories will soon lead to discounting on a broad range of goods.

The key question is whether services will act as offsets, on both overall demand and inflation. Services PMIs will be out next week but last week’s flash PMIs and many other indicators are not supportive.

This next chart says that headline inflation should have already eased under the weight of declining commodity prices but rising wages and high energy costs are keeping services prices up, so far.

Inflation has decoupled from commodities as service prices surge.

Source: @RichardDias_CFA via The Daily Shot

Eurozone Inflation Hits Record in Boost for Big-Hike Calls

Driven once more by soaring food and energy costs, consumer prices jumped 8.6% from a year earlier in June — up from 8.1% in May. Economists surveyed by Bloomberg saw a gain of 8.5%. The median estimate in the poll has fallen short for 11 of the last 12 months. (…)

Goldman Strategists Warn Risk of Stock Selloff Is Still High

(…) “Much of the valuation de-rating this year has been due to higher rates/inflation,” strategists led by Christian Mueller-Glissmann wrote in a note dated June 30. “Unless bond yields start to decline and buffer rising equity risk premiums due to recession fears, equity valuations could decline further.” (…)

Corporate earnings are also likely come under pressure in the second half of the year, the strategists said, as margins face the test of surging prices and weakening consumer sentiment.

Airbus Wins $37 Billion China Jet Deals in Blow to Boeing

Airbus SE won one of its biggest ever single-day hauls, selling almost 300 airliners worth more than $37 billion to four Chinese airlines in a coup for the European manufacturer in its tussle with Boeing Co. for dominance in Asia’s largest economy.

China Eastern Airlines Corp. will buy 100 A320neo narrow-body jets, while Air China Ltd. will take 64 jets, with its Shenzhen Airlines subsidiary acquiring 32 more, according to separate company filings Friday. China Southern Airlines Co. said earlier it would buy 96 A320neos, as well as leasing additional planes. (…)

The orders come at a time of rising political tensions between the US and China. (…)

Omicron variants drive surge in UK Covid-19 infections Covid-19 infections in England have jumped by 34 per cent in a week as new Omicron strains drive a wave of new cases across the UK

GDP Dip Was Bigger Than Thought

I generally don’t post about revisions to GDP data; backward looking, they are also normally insignificant. Note that this was the third estimate for Q1.

This one, however, is a true shocker and deserves everybody’s attention. Not because GDP contracted 1.6% vs 1.5% previously released but because of the huge revisions in the composition. Here’s the very short WSJ account:

Consumer spending, the economy’s main engine, was much softer in the first quarter than previously reported, according to Commerce Department gross domestic product revisions released Wednesday. Spending grew at a revised annual rate of 1.8% in the first quarter, down from a previous estimate of 3.1%.

A revision in consumer spending growth from +3.1% to +1.8% is a pretty big deal on its own, particularly when the consumer currently acts as the main growth engine supposed to be fueled by its large excess savings and prevent us from contracting or stagflating.

The narrative was that the consumer is healthy and flush with cash. Weaker goods consumption would be more than offset by revenge spending on services.

Well, we are now told that:

• spending on goods was weaker than originally measured: -0.3% vs 0.0%.
• spending on services, originally seen up 4.8%, was actually up 3.0%.

Perhaps not that big a deal, Omicron can take most of the blame given weaker recreation services consumption.

But the bigger, shocking, revision was on personal disposable income revised down “primarily reflecting an upward revision to personal current taxes.” See the trends from the first estimate to the second and to yesterday’s third revision:

                    Disposable Income

                                   Nominal $   Constant $

First estimate:            +4.8%           -2.0%

Second estimate:       -0.2%           -6.7%

Third estimate:           -1.3%           -7.8%

No, the columns are ok, real disposable income actually fell 7.8% annualized in Q1.

Never mind slower overall consumption growth and lesser revenge spending on services, the fact, and the problem, is that the unspent money is not resting in savings since disposable income is actually much lower than thought, which will continue to impact consumers’ ability to spend in future quarters.

Expenditures are now 5.0% above disposable income, the latter being flat with its pre-pandemic level and falling:

As somebody said, it’s difficult to make predictions, particularly about the future, but the facts are that the American consumer is spent out and has fewer savings than thought. The narrative featuring “a very strong, healthy consumer” needs to change, starting with Mr. Powell himself.

Hopefully, predictions that “excess savings” will save us all will prove better than those on inflation…

Yesterday, prior to the GDP revisions release:

Powell Says Fed Must Accept Higher Recession Risk to Combat Inflation Federal Reserve is raising interest rates at aggressive pace as price pressures hit 40-year high

Federal Reserve Chairman Jerome Powell said he was more concerned about the risk of failing to stamp out high inflation than about the possibility of raising interest rates too high and pushing the economy into a recession.

“Is there a risk we would go too far? Certainly there’s a risk,” Mr. Powell said Wednesday. “The bigger mistake to make—let’s put it that way—would be to fail to restore price stability.” (…)

“There’s a clock running here,” Mr. Powell said during a moderated discussion Wednesday at the European Central Bank’s annual economic policy conference in Portugal. “The risk is that because of the multiplicity of shocks, you start to transition into a higher-inflation regime. Our job is literally to prevent that from happening, and we will prevent that from happening.” (…)

“There’s no guarantee” of a more benign outcome, Mr. Powell said Wednesday. “It has gotten harder. The pathways have gotten narrower.” Later, he added, “The process is highly likely to involve some pain, but the worse pain would be in failing to address this high inflation and allowing it to become persistent.”

Europe’s top central bankers, speaking on the same panel as Mr. Powell, indicated they would proceed more cautiously than the Fed in increasing interest rates as they gauge the economic fallout of the war in Ukraine. The conflict is driving up energy and commodity prices in Europe while sapping consumers’ purchasing power in a region that relies heavily on imported energy.

“Moving gradually is certainly appropriate in times of high uncertainty,” said ECB President Christine Lagarde.

Ms. Lagarde reaffirmed plans to gradually raise the bank’s key interest rates at policy meetings in July and September. She said the bank could move more quickly if it became easier to judge the trajectory of the economy. (…)

Bank of England Gov. Andrew Bailey said the U.K. economy was dealing with “a very large national real income shock” as a result of the war, and that it wasn’t clear how that would pass through to inflation.

Mr. Bailey signaled that U.K. policy makers could consider a 0.5 percentage point interest-rate rise at their July policy meeting if there are persistent signs that price increases are a problem. The bank increased its key rate by 0.25 percentage point earlier this month, to 1.25%, as inflation rose above 9%.

“There will be circumstances in which we will have to do more. We’re not there yet,” Mr. Bailey said. (…)

BTW: McCormick and Bed Bath take beyond a bath

Companies with a May quarter end are now reporting and continuing the cascading since the end of the rather solid March quarter. Retailers with an April quarter end warned us of the poor April. MCK and BBBY had 2 of their 3 months in the squeeze:

• BBBY reported Q1’22 adj. EPS of ($2.83), well-below Consensus (Refinitiv Eikon) of ($1.39), with a comp sales decline of -23%. Adjusted gross margin of 23.8% vs 34.9%, including an inventory markdown reserve of -620 bps and -220 bps from supply chain related port fees. Inventories increased by +12.5% YoY this quarter, while total sales declined by -25.1%.

FYI, BBBY touched $54 in early 2021 when a meme stock. Closed at $5 yesterday!

• Goldman Sachs on MCK:

MKC reported adjusted FY2Q22 (May) EPS of $0.48, below our $0.63 estimate and FactSet estimate of $0.65. Sales of $1.54bn were 3.7% below our estimate, with constant currency sales growth of +0.3% below our 3.8% forecast, with weakness in Consumer unable to offset stronger Flavor Solutions performance.

Adjusted EBIT of $173.8mn was 27.2% below our forecasts (-$0.19) (…). Consumer EBIT of $124.8mn was 24.3% below our forecast on constant currency revenue growth of -6.9% (vs. GSe 2.0%) compounded by higher costs, while Flavor Solutions EBIT of $49.0mn was 33.7% below our forecast (-$0.07) on higher costs despite constant currency revenue growth 490bps above our forecast.

At the corporate level, gross margins of 34.0% were 350bps below our forecast and down 550bps Y/Y, with SG&A as a percent of sales 20bps above our forecast, and consolidated operating margins of 11.3% 360bps below our forecast (down 530bps Y/Y).

There are about another 10 companies to report their May quarter. Then we get the flood of June quarter ends, that’s April, May and June.

Home Listings Surge in Turnabout for Supply-Starved US Market

With fewer buyers competing, the number of active US listings jumped 18.7% in June from a year earlier, the largest annual increase in data going back to 2017, Realtor.com said in a report Thursday. And new sellers entered the market at an even faster rate than before the pandemic housing rally began. (…)

Active listings more than doubled from a year earlier in metro areas including Austin, Texas; Phoenix; and Raleigh, North Carolina, the data show. They climbed 86% in Nashville, Tennessee, and 72% in the Riverside, California, region.

Stellantis Warns of Car Market Collapse If EVs Don’t Get Cheaper

(…) Stellantis NV is aiming to cut the cost of making electric vehicles 40% by 2030, Chief Manufacturing Officer Arnaud Deboeuf said Wednesday. The producer of Fiats and Peugeots plans to manufacture some parts in-house and also pressure suppliers to cut the price of their products. (…)

EV prices are going up at a dizzying pace these days. Tesla Inc. raised prices by as much as $6,000 per car this month, following similar hikes earlier this year from Rivian Automotive Inc. and Ford Motor Co. Rising raw-materials costs are rendering some battery-powered models unprofitable, Ford Chief Financial Officer John Lawler said at an investor conference earlier this month. (…)

FYI:

Data: FactSet; Chart: Axios Visuals

China’s Economy Returns to Growth Mode Services and construction activity rebounded in June, while weak export orders weighed on manufacturers, surveys showed

(…) China’s official purchasing managers index for nonmanufacturing sectors posted a reading of 54.7 in June, a big jump from the previous month’s 47.8, the National Bureau of Statistics said Thursday. The surge was led by a rebound in construction and the services sector, where the lifting of Covid-19 restrictions unclogged transportation blockages and allowed people to return to stores and restaurants.

The reading was the highest since May last year, survey data shows, and follows three straight months of declines as lockdowns blanketed major cities such as Shenzhen and Shanghai. A reading above 50 indicates activity is expanding rather than shrinking.

Manufacturing activity returned to growth but the rebound was weaker than economists were anticipating. The purchasing managers index for the manufacturing sector notched up a reading of 50.2, higher than the previous month’s 49.6, but lower than the 50.5 reading expected by analysts polled by The Wall Street Journal.

Overall production rose, but new export orders were weak, the survey showed, highlighting fading global demand.

Weakening demand is the biggest problem that factories now face, said Zhao Qinghe, a senior statistician with China’s statistics bureau, who added that falling factory-gate prices are squeezing companies’ earnings. (…)

A subindex tracking service-sector activity surged to 54.3 from 47.1, while a subindex for construction activity reached 56.6 as infrastructure investment accelerated. China’s cabinet, known as the State Council, said this week that construction began on 120 new expressway and other highway projects between January and May, with overall investment in the road network during that period exceeding the equivalent of $1 trillion.

Separately on Thursday, a survey of 102 member companies by the American Chamber of Commerce in China found that 44% of respondents had reduced or delayed planned investment in China as a result of recent Covid-19 outbreaks, highlighting the strain on foreign businesses from Beijing’s zero-tolerance approach to the virus.

Forty-six percent reported lingering production difficulties even after lockdowns were eased, citing staff shortages, supply issues and other problems, according to the survey, which was conducted between June 22 and 24.

JPMorgan Says Crypto’s Deleveraging Cycle Won’t Last Much Longer

(…) “The current deleveraging cycle may not be very protracted,” the strategists said, given “the fact that crypto entities with the stronger balance sheets are currently stepping in to help contain contagion” and that venture-capital funding, “an important source of capital for the crypto ecosystem, continued at a healthy pace in May and June.” (…)

Total market cap was down to around $930 billion on Thursday, according to pricing from CoinGecko, after having surpassed $3 trillion in November. (…)

• More Crypto ‘Meltdowns’ to Come Thanks to Fed Mistakes, Pantera’s Morehead Says

(…) Morehead, who started a Bitcoin fund when the token was still being ignored by many on Wall Street, says the “cascading collapse” of major digital-asset projects has helped expose the leverage in the system. At the center of the maelstrom are a number of hedge funds and lenders who have found themselves in hot water amid a digital-asset price slump this year. (…)

“There are probably a few more to come in the next month or two,” he wrote. “Each bankrupt leveraged entity leaves a string of problems for their counterparties.” (…)

Data: CoinGecko; Chart: Axios Visuals