If you look at the financial markets, you can “read” what investors are thinking about the economic outlook – are the shocks positive or negative, and are they supply or demand shocks?
Over the past week three things have happened, all of which may have moved the markets:
A deal between the Trump administration and the regime in Iran to halt the fighting and gradually reopen the Strait of Hormuz.
The new Fed chairman, Kevin Warsh, has held his first FOMC meeting – and the signal was clear: “The Committee will deliver price stability” – the implication being that inflation is above the 2% target, and the Fed is going to do something about it.
SpaceX has been floated – the largest IPO in history. It went well for the first few days, but the past few days have not been pretty.
The first event is a positive supply shock – and oil prices therefore fall. That is good news for the world economy.
The second is, by contrast, a negative demand shock – the Fed is signalling clearly that rate rises have moved much closer. A negative demand impulse sends both growth and inflation down. Lower growth is not good for oil prices either, so down they go a little further.
And finally SpaceX – this is the story of an equity market that has become too expensive. It is neither a demand nor a supply shock, but it can develop into a negative demand shock if it leads to financial distress, in which investors increase their demand for “safe assets” – primarily dollars and government bonds.
If that happens, a larger equity-market correction should produce a stronger dollar and lower bond yields (and lower inflation expectations).
Lower equities (pointing to overvaluation of the equity market and/or a negative demand shock).
Lower inflation expectations and lower yields (a positive supply shock and/or a negative demand shock).
A stronger dollar (tighter monetary policy and/or rising risk aversion as a result of the repricing of the US equity market).
Taken together, then, it looks as though this is mostly about Kevin Warsh – and, to some extent, Elon Musk’s space project.
Investors are reacting to the fact that Warsh was considerably more hawkish than expected. The Fed has a clear mandate to secure price stability, and it has not lived up to that mandate for more than five years. But Warsh and the rest of the FOMC now appear to be sending a clear signal that something will be done about it. Credibility is to be restored.
That also fits, incidentally, with what we are seeing in the yield curve – long yields, which measure growth and inflation expectations, are falling relative to short yields, which are governed more by expectations about monetary policy.
There is, by contrast, not much effect from Trump’s “peace deal” with the Iranians. If that had dominated, equities should have risen. That has most certainly not happened.
Forza Horizon 6 has already launched on Xbox Game Pass as a day one release, making May a big month for the subscription service. Still, what Microsoft gives, it also takes away, as two phenomenal JRPGs – Metaphor: ReFantazio and Persona 4 Golden – will leave the service at the end of the month.
Xbox Game Pass, a CNET Editors’ Choice award pick, offers a wide selection of games that you can play on your Xbox Series X, Xbox Series S, Xbox One and PC or mobile device for as little as $10 a month. And with a subscription to the higher-tiered Game Pass Ultimate ($23 a month), you can access hundreds of games, including new ones the day they’re released, each month.
Here are the games Microsoft plans to bring to Game Pass in May. You can also check out other games the company added to the service in April, including Hades 2, and more options in our list of the best gaming subscriptions.
Forza Horizon 6
On Game Pass Ultimate, Game Pass Premium and PC Game Pass now.
Forza Horizon 6 is the latest open-world racing game from Playground Games. This time, players can speed around Japan, from the busy cities to the countryside roads. More than 550 cars are available to collect via races, seasonal events and online challenges. The game continues the arcade-style racing the series is known for, and with more car customizations, a deeper progression system and dynamic weather changes affecting road conditions.
Dead Static Drive
On Game Pass Ultimate, Game Pass Premium and PC Game Pass now.
Dead Static Drive mixes road trip exploration, survival horror and action gameplay in a strange post-apocalyptic world filled with supernatural threats. Players travel across highways and down while scavenging supplies, upgrading vehicles and fighting bizarre creatures. The game combines tense combat with quiet exploration, creating an eerie atmosphere with retro graphics.
Pigeon Simulator is a sandbox game unlike any other. As a pigeon, it’s up to the player to create as much disruption as possible in order to complete objectives, annoying pedestrians out for a walk and making use of the game’s unique physics systems. Players can fly over streets, knock over objects and find hidden secrets in this absolutely absurd game.
Remnant 2
On Game Pass Ultimate, Game Pass Premium and PC Game Pass now.
The soulslike subgenre is popular among gamers, and the Remnant franchise does a little something different by replacing swords with guns. In Remnant 2, players will fight off monsters and giant bosses in a world filled with secrets and loot. The sequel improves on the original by having more ways to customize your character and larger-scale battles intended for solo or cooperative play.
Luna Abyss
On Game Pass Ultimate, Game Pass Premium and PC Game Pass now.
Luna Abyss is a fast-paced first-person shooter set in a mysterious underground colony. The sci-fi horror shooter has players descending deeper into a massive prison facility while battling enemies and learning the secrets of what happened here. The game offers stylish combat with fast movement as the story is told via the environments, which creates a tense and exciting experience built around shooting and exploration.
Escape Simulator
Coming to Game Pass Ultimate, Game Pass Premium and PC Game Pass on May 26.
Players work together to solve puzzles and uncover hidden clues in Escape Simulator. The cooperative escape room experience puts players in themed areas such as mysterious labs or fantasy dungeons. Each room introduces new mechanics and requires teams to work together to escape. The game’s online community can also contribute to the game by creating their own rooms with custom scenarios.
Echo Generation 2
Coming to Game Pass Ultimate and PC Game Pass on May 27.
Echo Generation 2 continues the voxel-inspired RPG series with a new adventure focused on supernatural mysteries with turn-based combat. Players explore strange towns, investigate paranormal events and battle bizarre enemies. The sequel expands on the original game’s storytelling and combat system while keeping the colorful visuals and quirky humor.
The Outer Worlds: Spacer’s Choice Edition
Coming to Game Pass Ultimate, Game Pass Premium and PC Game Pass on May 27.
The Outer Worlds: Spacer’s Choice Edition is the complete, remastered version of the 2019 sci-fi RPG from Obsidian Entertainment. This version includes the previously released DLC, a higher level cap, better graphics, improved performance, additional animations and more improvements on the original game.
Crashout Crew
Coming to Game Pass Ultimate and PC Game Pass on May 28.
A mix of party game chaos and cooperative action, Crashout Crew throws players into unpredictable arenas filled with traps, obstacles and physics-based mayhem. Players race to complete objectives while trying to survive the hectic action. Fast matches, colorful visuals and multiplayer gameplay make it easy to play online with friends or strangers.
Kabuto Park
Coming to Game Pass Ultimate, Game Pass Premium and PC Game Pass on May 28.
Collecting rare insects and exploring colorful outdoor environments are at the center of Kabuto Park. You have to search forests and parks to find new species while upgrading equipment to compete in bug tournaments. The cheerful art style blends with exploration and creature collection, making for a relaxing game about finding bugs.
Final Fantasy 6
Coming to Game Pass Ultimate, Game Pass Premium and PC Game Pass on June 2.
Final Fantasy 6 is not only one of the best Final Fantasy games, but it’s also one of the best games ever. First released on the SNES in 1994, the game follows a cast of characters out to save the world. This version is part of the Pixel Remaster for the older Final Fantasy 2D games that improves on the visuals, updates the audio and adds modern gameplay improvements so new and returning players can enjoy.
Jurassic World Evolution 3
Coming to Game Pass Ultimate, Game Pass Premium and PC Game Pass on June 2.
Building and managing a dinosaur theme park returns in Jurassic World Evolution 3. As the park manager, you’ll have to balance guest entertainment, scientific research and park security while also dealing with those giant dinosaurs just waiting to take over the island. Expanded customized tools, a new management system and improved creature behaviors improve on the previous games while adding more depth to the simulation gameplay, giving players a taste of what running a dinosaur park could feel like.
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Games that are leaving the service
While Microsoft is adding the above games to Game Pass, it will also remove five games, including two amazing JRPGs: Metaphor: ReFantazio and Persona 4 Golden. If you want to finish either of these games before the end of the month, now is the time as these games take many hours to beat.
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