Tag Archives: Economic Decline

U.S. Dollar weakens after worse-than-expected consumer spending

Global Markets

NEW YORK (Reuters) – Wall Street shares rose in choppy trading as the dollar fell following weaker-than-expected U.S. economic data on Monday that cut expectations of a near-term interest rate increase by the Federal Reserve.

The dollar reversed earlier gains and moved lower after U.S. consumer spending data indicated a sluggish economy with weak first-quarter gross domestic product growth.

Monday’s worse-than-expected consumer spending, as well as a downward adjustment to January’s numbers and weak readings for personal income and inflation, cast doubt on the prospect of the Fed raising rates at either of its upcoming meetings in April and June.

The dollar had benefited last week from stronger-than-expected economic data and comments from some Fed officials indicating that policymakers think they could raise interest rates as early as next month.

“Because we had softer (personal consumption expenditures) data and also the big downward revision in spending in January, that is causing a lot of the (dollar) long trades that many have put on to be cut back,” said Kathy Lien, managing director at BK Asset Management in New York.

“Today’s report certainly raises the question of whether the Fed can pull the trigger in June.”

Higher interest rates increase the strength of the dollar by making it more attractive to investors, but a strong dollar can weigh on the returns of firms that do business overseas, hurting earnings.

The dollar index <.DXY> dipped 0.2 percent against a basket of six major currencies, falling to 95.950. It had risen to as much as 96.339 prior to the data, its highest in almost two weeks.

Following the data’s release on Monday, markets <0#FF:> are pricing in only about a 37 percent chance of a rate hike by the Fed in June, with only a 10 percent chance of an April increase factored in so far, according to CME Group’s FedWatch tool.

The weak dollar benefited U.S. stocks, which rose in afternoon trading, led by the materials and consumer discretionary sectors, as utilities and energy dragged.

With share markets in Europe closed, as well as those in Australia, New Zealand and Hong Kong for holidays following last week’s Good Friday holiday in the U.S., trading was generally light for much of the day.

The Dow Jones industrial average <.DJI> rose 34.86 points, or 0.2 percent, to 17,550.59, the S&P 500 <.SPX> gained 3.55 points, or 0.17 percent, to 2,039.49 and the Nasdaq Composite <.IXIC> added 2.06 points, or 0.04 percent, to 4,775.57.

MSCI’s measure of emerging markets stocks <.MSCIEF> rose by around 0.1 percent in thin trading. MSCI’s index of world shares <.MIWD00000PUS> gained 0.11 percent.

Bonds rose in price in the wake of the U.S. data, with yields on benchmark U.S. 10-year Treasuries falling to 1.8684 percent.

Oil prices, which have risen about 50 percent since multi-year lows hit in January, turned lower in thin trading.

U.S. crude futures <CLc1> fell 0.5 percent to $39.04 per barrel, and Brent <LCOc1> lost 0.8 percent to $40.11.

Fed Chair Janet Yellen and other Fed policymakers are expected to speak on Tuesday, making the U.S. central bank’s policy the main focus for now.

(Reporting by Dion Rabouin; Editing by Nick Zieminski and Alan Crosby)

Dollar turns lower against euro, yen on doubts over rally’s momentum

By Sam Forgione

NEW YORK (Reuters) – The U.S. dollar lost ground against the yen and was mostly flat against the euro on Wednesday, reversing earlier gains after traders took profits on skepticism that central bank policy in the United States and elsewhere would continue to diverge.

The dollar fell to a session low of 113.23 yen after hitting a more than two-week high against the Japanese currency of 114.55 yen early in the U.S. trading session. The euro was last up slightly against the dollar at $1.0866 after hitting a more than one-month low of $1.0826 earlier.

Early in the U.S. session, data showing stronger-than-expected growth in U.S. private payrolls in February added to a recent pile of reassuring U.S. economic data and boosted expectations that the Federal Reserve would hike interest rates at least once this year.

That optimism cooled, partly on doubts that uniformly strong U.S. economic data would continue and that the European Central Bank would announce a greater stimulus package and weaken the euro at the central bank’s meeting on March 10.

“People are taking a bit of a profit after a strong ride,” said Sebastien Galy, currency strategist at Deutsche Bank in New York, in reference to the dollar’s recent gains. “Everyone knows the dollar, for good reasons, is too expensive.”

The ADP National Employment Report showed U.S. private employers added 214,000 jobs in February. That was above economists’ expectations for a gain of 190,000, according to a Reuters poll.

Uncertainty remained over the impact of low oil prices on Fed policy and China’s economic growth, leading traders to take profits in the dollar’s gains, said Sireen Harajli, currency strategist at Mizuho Bank Ltd in New York.

Harajli said uncertainty ahead of Friday’s U.S. non-farm payrolls report for February may have contributed to the reversal in the dollar’s rally. Economists polled by Reuters expect U.S. employers to have added 190,000 jobs last month.

The U.S. dollar index, which hit a roughly one-month high of 98.582 earlier, was last down 0.17 percent at 98.176 <.DXY>. The dollar was last down 0.53 percent against the yen at 113.38 yen <JPY=>.

The dollar was last down 0.07 percent against the Swiss franc at 0.9962 franc <CHF=>.

(Reporting by Sam Forgione; Editing by Lisa Von Ahn)

Security & Economy, Greatest Threats to Americans ~ Rick Joyner

Rick Joyner is a true Christian leader for today.  Founder and Executive Director of MorningStar Ministries and Heritage International Ministries, he has authored more than forty books.  His opinion is sought after by leaders all over the world for his no nonsense, biblical, and common sense approach.

Rick is a true friend to Morningside. We truly respect his prophetic take on U.S. and world events and we understand his prophetic relationship with God.

Here are two recent posts from Rick regarding our economy.  https://www.facebook.com/RickJoyner.MorningStar .  Don’t forget that Rick Joyner will be here at Morningside, February 16th at 11:30am, for taping of the Jim Bakker Show!   

Rick Joyner 1-2-16 Facepost Post

The 2 biggest issues with the majority of Americans at this time are: #1 – Security, and #2 – the economy. It is likely that they will remain the top two until election, though they may occasionally change which one is on top. I think these are both the greatest threats to us at this time. I want to begin the year both illuminating the reasons for the crises we’re now facing, but also possible solutions, and will start with security because it does not matter how well you’re doing economically if you’re dead.

We will begin with the major sources of security threats:

1) Porous borders

2) Incompetent immigration procedures

3) Rogue nations with or attaining nuclear weapons and other WMD’s

4) Incompetent leaders and strategy at DHS

5) Weakening of U.S. military by cutbacks and the purging of competent leadership

6) Weakening of FBI and Intelligence Agencies

7) Cyber Security

8) Recent systematic attacks on law enforcement

9) Economic attacks intended to weaken the nation

10) Gov. policies weakening the economy and thereby weakening our ability to address the above

Any one of these areas could be the open door through which we suffer a crippling attack. If we are to be secure each of these must be addressed. Please share your ideas.

1/4/16 Rick Joyner Facebook Post

The Dow is off more than 400 points as I write, mostly on the bad news out of China. I warned about this news in my first post of the NY on Jan.2, and how this news of the Chinese slowdown would impact the whole world. The world economy is in a very dangerous place, and our world leaders are mostly politicians, not economists, and don’t understand world economics enough to lead us through what is coming. We are entering into very treacherous waters in many areas now, but I expect the economy to eclipse just about every other crisis as the #1 issue on the minds of people in the not too distant future. We need to not only pray for our leaders, but pray for leaders that can navigate through the times we’re entering.

 

Reuters: Wall St. dips as jobs data boosts odds of December rate hike

Photo courtesy of Reuters/Brendan McDermid

By Abhiram Nandakumar

(Reuters) – U.S. stock indexes were little changed in choppy morning trading on Friday after a stronger-than-anticipated jobs report hardened the chance that the Federal Reserve would finally raise interest rates in December.

Eight of the 10 major S&P sectors were lower, with the interest-rate sensitive utilities sector’s <.SPLRCU> 3.42 percent decline easily the worst. The financials sector <.SPSY> was up 1.25 percent, led by bank stocks.

Job growth in October was the best since December 2014, while the unemployment rate fell to 5 percent, the lowest since April 2008. The jobless rate is now at a level many Fed officials view as consistent with full employment.

“In the short term, this is likely to trigger increased volatility, but if rates edge up and the world doesn’t end, markets will start gaining confidence,” said Robert Craig, Private Client Investment Manager at MB Capital in London.

“For a while now, it has felt like the Fed has wanted to clear the psychological hurdle of that first rate rise, and it’s now got that opportunity.”

Traders raised the odds of a hike in December to 70 percent from the 58 percent just before the jobs data was released, according to the CME Group’s FedWatch program.

The dollar <.DXY> rose to a 6-1/2 month high after the data.

Higher rates increase borrowing costs for companies, while a strong dollar hurts their income from overseas markets.

At 10:44 a.m. ET, the Dow Jones industrial average <.DJI> was up 2.34 points, or 0.01 percent, at 17,865.77.

The S&P 500 <.SPX> was down 5.03 points, or 0.24 percent, at 2,094.9 and the Nasdaq Composite index <.IXIC> was up 5.21 points, or 0.1 percent, at 5,132.95.

Among financial stocks, JPMorgan <JPM.N> rose 3 percent and gave the biggest boost to the S&P 500, followed by Bank of America <BAC.N>, up 3.8 percent and Citigroup <C.N>, up 3.2 percent.

Goldman <GS.N> rose 3.3 percent and was the biggest influence on the Dow, followed by Disney <DIS.N>, which was up 2.6 percent after reporting a higher-than-expected profit.

Exxon <XOM.N> was down 1.5 percent to $83.59, the biggest drag on the S&P, after the New York attorney general launched an investigation into whether the company misled the public and shareholders about the risks of climate change.

Energy stocks <.SPNY> fell 1 percent as crude oil prices slipped. Chevron <CVX.N> shed 2 percent and weighed the most on the Dow.

TripAdvisor <TRIP.O> slumped 10 percent to $74.82, while Kraft Heinz <KHC.O> was down 4 percent at $72.49 after both reported quarterly results below estimates. Kraft was the biggest drag on Nasdaq.

Declining issues outnumbered advancing ones on the NYSE by 2,222 to 758. On the Nasdaq, 1,452 issues fell and 1,126 advanced.

The S&P 500 index showed 11 new 52-week highs and six new lows, while the Nasdaq recorded 107 new highs and 50 new lows.

 

(Reporting by Abhiram Nandakumar in Bengaluru, additional reporting by Charles Mikolajczak; Editing by Savio D’Souza)

Largest U.S. Banks $120 Billion Shortfall

A regulatory requirement proposed on Friday by the Federal Reserve will force six of the eight globally systemically important U.S. banks to raise an additional $120 billion in order to comply.  

Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs Group, JPMorgan Chase, Morgan Stanley, State Street, and Wells Fargo are to follow the requirements aimed at ensuring the banks so they are able to recapitalize without disrupting markets or requiring a government bailout.  

The banks are expected to meet the $120 billion shortfall by issuing debt, a usually more cost-effective way than issuing equity, according to Federal Reserve officials speaking at a background press briefing Friday.

This proposal, along with others has been taken to avoid chaotic bank failures and according to Federal Chair, Janet Yellen, “would substantially reduce the risk to taxpayers and the threat to financial stability stemming from the failure of these firms.”

This requirement is one of a series of rules that have been aimed at reducing risk in the banking system by determining how much debt and equity banks should use to fund themselves.

Global stocks dip, bond yields rise as Fed zest fades

Photo courtesy of Reuters/Brendan McDermid

NEW YORK (Reuters) – Stock markets around the world fell and bond yields rose as investors weighed the implications that a U.S. interest rate rise before the end of the year would have for the global economy and markets.

The Federal Reserve, which kept its rates on hold as expected on Wednesday, took the unusual step of strengthening its language about timing in its statement, making it clear that a December rate hike was still possible. The Fed also removed a previous warning about slowing global growth.

Wall Street was lower, giving up some of Wednesday’s gains. The U.S. stock market initially reacted negatively to the Fed statement, but later reversed course to end near the day’s highs on Wednesday.

The MSCI All-Country World Index <.MIWD00000PUS> has recovered most of the losses that occurred beginning in mid-August on worries about slowed worldwide demand and the Fed’s plans. It was last down 0.6 percent on Thursday.

U.S. Treasury yields continued Wednesday’s rise after the Fed explicitly referred in its statement at the end of its two-day policy meeting to conditions necessary “to raise the target range at its next meeting”. Reference to a particular meeting is rare for the Fed.

The benchmark 10-year Treasury yield rose 7 basis points to 2.16 percent <US10YT=RR>. The two-year note’s yield was 0.73 percent, highest since late September.

The Dow Jones industrial average <.DJI> fell 32.98 points, or 0.19 percent, to 17,746.54, the S&P 500 <.SPX> lost 1.42 points, or 0.07 percent, to 2,088.93 and the Nasdaq Composite <.IXIC> dropped 12.32 points, or 0.24 percent, to 5,083.38.

The first estimate of third quarter U.S. growth, released on Thursday, showed the world’s biggest economy expanded at a 1.5 percent annualized pace, below the expected 1.6 percent. But economists expect growth to pick up in the fourth quarter, given strong consumer spending figures.

In Europe the pan-European FTSEurofirst 300 index <.FTEU3> was down 0.2 percent at 1,481 points. Earlier in Asia, Japan’s Nikkei share average <.N225> gained 0.2 percent to close at 18,935.71.

Many investors are still not convinced about a rate lift-off given a recent run of soft U.S. data, making economic releases in coming weeks more crucial in determining a December move.

Economists expect a key U.S. manufacturing index due Monday <USPMI=ECI> to show the first contraction in the sector in 2-1/2 years, which would not be conducive for a rate hike.

The Fed’s stance contrasts to the European Central Bank and other major central banks, a factor that is expected to underpin the dollar. The Fed and ECB hold policy decisions within two weeks of each other in December.

The ECB last week signaled its readiness to inject more stimulus to boost prices and the People’s Bank of China followed with its sixth interest rate cut in less than a year.

The dollar gave back its earlier gains, with the euro trading 0.4 percent higher on the day at $1.0966 <EUR=>, having skidded to a 2-1/2 month low of $1.0826 overnight.

Crude oil futures were slightly higher one day after soaring more than 6 percent as the U.S. government reported an inventory build.

U.S. crude <CLc1> rose 0.4 percent to $46.11 a barrel. Brent <LCOc1> was steady at $49.05. Spot gold <XAU=> fell 2 percent to $1,150 an ounce.

(By David Gaffen; Additional reporting by Anirban Nag; Editing by Gareth Jones and Nick Zieminski)

Chinese Stocks Fall Short on Third Quarter, Oil prices Drop Below $50 a Barrel

According to a Reuters poll of 50 economists, China’s growth in the July-September shows that it has slowed to 6.8 percent; down from 7 percent in the second quarter. If this report is correct, this would reveal China’s weakest growth pace since 2009 when it fell to 6.2. percent in the first quarter.  

According to some news sources this is better than predicted given the unsurety of the market in the last few months. But China’s growth data is always watched and considered to be one of the main global barometer on the economy.  

Crude oil prices are also fell again at 3 percent on Monday and below $50 a barrel.    According to news sources, the signs that a nuclear deal will begin this year that will waive sanctions on Iranian oil are contributing to the already rollercoaster oil market.      

Bloomberg reports that Iranian oil minister Bijan Namdar Zanganeh announced that OPEC should manage the market by reducing the level of production and wants prices back to between $70 and $80 a barrel.    

West Texas Intermediate crude oil is lower by 1.1% at $46.73 a barrel.

Trunews: U.S. will hit debt ceiling no later than Nov. 3: Treasury’s Lew

The U.S. government will hit a legal debt limit and be unable to borrow more money no later than Nov. 3, Treasury Secretary Jack Lew said on Thursday.

In a letter to congressional leaders, Lew added that a remaining cash balance of less than $30 billion would swiftly deplete.

“In fact, we do not foresee any reasonable scenario in which it would last for an extended period of time,” Lew said, as he urged Congress to raise the debt cap.

Trunews – Trunews: U.S. will hit debt ceiling no later than Nov. 3: Treasury’s Lew

China Third Quarter Growth Weakest Since 2009

Policymakers are feeling the pressure to make new support measures as China’s economic growth in the third quarter fell to 6.8%, the weakest it’s been since 2009.

Chinese leaders are scrambling to reassure global markets that Beijing has the capability to manage the world’s second-largest economy even after suffering from the devaluation of the yuan and a stock market plunge that took place over the summer.

According to Reuters poll of 50 economists, China’s growth in the third quarter last year also saw a drop to 6.8%. The lowest expansion seen was in 2009, when China saw it fall to 6.2%

Some investors fear that growth levels could already be weaker than the official data suggests, creating skepticism about the reliability of Chinese official data.

“We expect the government to maintain loose monetary policy and step up fiscal spending in response to the economic slowdown,” economists at China International Capital Corp (CICC), a domestic investment bank, said in a note.

“We believe that loosening measures may help cushion the slowing momentum in economic growth but it’s difficult to reverse the long-term downward trend.”

Beijing is still in line with its full target for the year as the first two quarters saw economic growth of 7.0%, despite property downturn, industrial overcapacity, and weak exports and imports. Currently, the government claims that the reports have not been inflated to meet official forecasts.

China’s Foreign Exchange Reserves Fall by over $43 Billion in September

China’s foreign exchange reserves lost $43.3 billion in September as the central bank intervened to stabilize the yuan and calm sentiment after a surprise devaluation of its currency rocked global markets.

China houses the world’s largest reserves and dropped to $3.514 trillion last month after a record slide of $93.9 billion in August. Questions have been raised about how sustainable China’s efforts to support the yuan are after the devaluation of the yuan and the fall of the reserves.

Analysts expect the reserves to keep falling.

“The decline in China’s foreign reserves, while less than market expected, still shows that China’s central bank continued the market intervention in the past month,” said Singapore-based Zhou Hao, senior economist in Asia at Commerzbank.

“As PBoC [People’s Bank of China] also intervened into the forward market in the past month, the foreign reserves will likely plunge again when these forward contracts mature,” he said.

The devaluation of the yuan has leaders worrying about a global currency war as well as it raised doubts on Beijing’s ability to manage a transitioning economy. China is shifting its economy to being led by domestic demand rather than an investment and exports led model.

According to Bloomberg, the value of yuan rose 0.22% Wednesday to 6.5340 a dollar, the strongest level since mid-August.