Key Takeaways
- US credit card delinquency rates (90+ days) have surged to 13.1%, the highest level recorded since 2011, signaling severe consumer stress.
- US CENTCOM has redirected 109 commercial vessels as part of an active blockade against Iran in the Arabian Sea, significantly escalating Middle East tensions.
- US mortgage applications plummeted 8.5% this week as the 30-year fixed rate climbed to 6.65%, dampening housing market activity.
- Brazil's May inflation (IPCA) came in hot at 0.62%, exceeding analyst estimates of 0.57% and pushing the year-over-year rate to 4.64%.
- Uber (UBER) is reportedly internalizing doubts regarding the return on investment for its massive artificial intelligence expenditures.
US Consumer Health and Housing Under Pressure
The New York Fed reported a sharp deterioration in household balance sheets this morning, revealing that 13.1% of US credit card balances are now 90+ days delinquent. This represents the highest level of serious delinquency since the aftermath of the Great Recession in 2011. Analysts suggest that persistent inflationary pressures and high interest rates are finally exhausting the pandemic-era savings cushions of American households.
Adding to the economic cooling, US MBA Mortgage Applications for the week ending May 22 fell by 8.5%. This decline follows a rise in the 30-year mortgage rate to 6.65%, up from 6.56% the previous week. The combination of high borrowing costs and rising consumer debt levels is stoking fears of a broader slowdown in domestic discretionary spending.
In a controversial statement, House Speaker Mike Johnson noted that the $174,000 annual salary for members of Congress is "falling behind inflation." According to reports from Moneywise, Johnson suggested that lawmakers require the ability to trade stocks to maintain financial stability, a comment that has drawn immediate scrutiny amid the broader cost-of-living crisis facing US citizens.
Geopolitical Escalation in the Middle East and Eurasia
US CENTCOM confirmed that an MH-60R Sea Hawk helicopter from the USS Delbert D. Black (DDG 119) is actively patrolling the Arabian Sea to enforce a blockade against Iran. As of May 27, 109 commercial vessels have been redirected to ensure compliance with the blockade. The IRGC Navy responded by stating that "hostile countries" remain prohibited from the Strait of Hormuz, though 23 other vessels were permitted passage today.
Despite the military friction, some diplomatic channels remain open. Arabic sources indicate a potential US-Iran agreement could be reached within weeks, while Iranian Parliament member Mohsen Zanganeh stated that negotiations are currently focused on enrichment percentages rather than the principle of enrichment itself. The market remains on edge as the ECB's Santos Pereira warned that Middle East conflicts are expected to have a "significant impact" on global price developments.
In energy markets, Russian Urals oil supplies to Turkey fell to their lowest level in 18 months this May. Simultaneously, Russia has threatened to suspend gas and oil supplies to Armenia if the nation continues its pursuit of EU accession. Russia's Zakharova warned that such a move could wipe out nearly 40% of Armenia's trade turnover due to incompatibility with the Eurasian Economic Union.
Global Inflation and Corporate Developments
Brazil's IBGE released May inflation data showing a 0.62% monthly increase, surpassing the 0.57% expected by economists. The annual IPCA inflation rate now stands at 4.64%, up from 4.37% in the previous month. This acceleration may force the Brazilian central bank to maintain a more hawkish stance than previously anticipated by the market.
In the corporate sector, Uber (UBER) is facing internal skepticism regarding its AI investments. Reports from The Verge suggest the ride-hailing giant is questioning whether the heavy capital expenditure into artificial intelligence is yielding significant financial returns. This reflects a growing trend among tech giants to justify massive "AI-first" budgets to increasingly wary shareholders.
Conversely, European energy major Eni (ENI announced it will launch the second tranche of its €2.8 billion share buyback program within the next few days. This move comes as JP Morgan reports an increase in US Treasury investor optimism this week, suggesting some institutional players are positioning for a flight to quality amid the rising geopolitical and consumer risks.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.