Budget deficit smashes $1 trillion mark, the highest in seven years

The market’s trip to new highs is very different this time, and… Strength in chips and a whole host of other sleeper stocks is a telling sign that the market will make it to new highs. Market Insiderread more


The market’s trip to new highs is very different this time, and… Strength in chips and a whole host of other sleeper stocks is a telling sign that the market will make it to new highs. Market Insiderread more
Budget deficit smashes $1 trillion mark, the highest in seven years Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-09-12  Authors: jeff cox
Keywords: news, cnbc, companies, telling, deficit, sign, smashes, host, markets, market, highsmarket, budget, seven, mark, trip, highest, insiderread, stocks, trillion, sleeper


Budget deficit smashes $1 trillion mark, the highest in seven years

The market’s trip to new highs is very different this time, and…

Strength in chips and a whole host of other sleeper stocks is a telling sign that the market will make it to new highs.

Market Insider

read more


Company: cnbc, Activity: cnbc, Date: 2019-09-12  Authors: jeff cox
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Trump says Fed ‘boneheads’ should cut interest rates to zero ‘or less,’ US should refinance debt

President Donald Trump on Wednesday continued his verbal assault on the Federal Reserve, who he blames for slowing the economy, tweeting that the central bank should cut interest rates to zero or even set negative interest rates. “The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. This isn’t a mortgage, this is U.S. Treasury debt. I think it would be incredibly disruptive to financial markets, and interest rates would ultimate


President Donald Trump on Wednesday continued his verbal assault on the Federal Reserve, who he blames for slowing the economy, tweeting that the central bank should cut interest rates to zero or even set negative interest rates. “The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. This isn’t a mortgage, this is U.S. Treasury debt. I think it would be incredibly disruptive to financial markets, and interest rates would ultimate
Trump says Fed ‘boneheads’ should cut interest rates to zero ‘or less,’ US should refinance debt Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-09-11  Authors: jeff cox john melloy, jeff cox, john melloy
Keywords: news, cnbc, companies, fed, debt, zero, rates, interest, economy, trump, treasury, refinance, boneheads, united, cut, reserve


Trump says Fed 'boneheads' should cut interest rates to zero 'or less,' US should refinance debt

This is a developing story. Check back for updates.

President Donald Trump on Wednesday continued his verbal assault on the Federal Reserve, who he blames for slowing the economy, tweeting that the central bank should cut interest rates to zero or even set negative interest rates. The president also called Fed officials “boneheads” in the tweet.

“The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term,” he said.

The president also made a new suggestion not seen in some of his past attacks on the Fed, saying that the country should refinance its debt load.

“It’s not viable and could be a significant problem for investors, financial markets and ultimately the economy,” said Mark Zandi, chief economist at Moody’s Analytics. “The debt is not prepayable. There’s a contractual relationship the Treasury has with investors. This isn’t a mortgage, this is U.S. Treasury debt. I think it would be incredibly disruptive to financial markets, and interest rates would ultimately rise, not fall.”

It’s unclear how such an idea would work. The Treasury Department likely would have to be involved, and there have been calls recently to issue longer-term debt, such as a 50- or 100-year Treasury.

“From a theoretical standpoint, obviously it would be wonderful for the United States government over a period of year if it were to lengthen the maturities on debt that would have rates below 1%,” said banking analyst Dick Bove at Odeon Capital Group. “It would certainly be beneficial to the United States government. Whether it would be beneficial to the United States economy is an open question.”

Cutting rates to zero or below would cheapen debt costs but also make the U.S. a less desirable spot for capital flow as the ability to generate yield would disappear.

Trump had made a suggestion during the 2016 presidential campaign that would have involved renegotiating the debt. That idea then was widely dismissed as a move the actually could drive Treasury yields higher, jeopardize the nation’s standing among its creditors and pose a threat to the U.S. dollar as the world’s reserve currency.

During a CNBC interview in May 2016, Trump said that if the economy turned south, he would try to get creditors to accept partial payment on U.S. debt.

“I would borrow, knowing that if the economy crashed, you could make a deal,” he said then.

His idea was that the U.S. would pay less than face value on the Treasury debt it issues to cover the burgeoning budget deficit. However, doing so would only increase the costs of issuing the debt as creditors would demand higher interest payments.

Trump has long bemoaned Fed policy, saying the central bank should get more in line with the near-zero rates employed by the nation’s global competitors. The Fed currently targets its benchmark overnight lending rate in a range between 2% and 2.25%, the highest of any G-7 nation.

In previous tweets, he has repeatedly ripped his own appointee, Fed Chairman Jerome Powell, as being out of step with the economic needs in the U.S.

“The USA should always be paying the the lowest rate. No Inflation! It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing. A once in a lifetime opportunity that we are missing because of “Boneheads,” Trump said in Wednesday’s tweets.


Company: cnbc, Activity: cnbc, Date: 2019-09-11  Authors: jeff cox john melloy, jeff cox, john melloy
Keywords: news, cnbc, companies, fed, debt, zero, rates, interest, economy, trump, treasury, refinance, boneheads, united, cut, reserve


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Former Fed Vice Chair Kohn backs rate cut, rejects Dudley suggestion to foil Trump

In a CNBC interview, Kohn indicated he believes the Fed will follow market expectations and lower its benchmark overnight lending rate by 25 basis points at its Sept. 17-18 meeting. The economy is fine, it’s growing around 2%, has been growing around 2% for the last year. Market expectations are for another cut in either October or December, followed by an additional easing in early 2020. “I’m much less certain than the market seems to be that we need a whole bunch of decreases here,” he said. D


In a CNBC interview, Kohn indicated he believes the Fed will follow market expectations and lower its benchmark overnight lending rate by 25 basis points at its Sept. 17-18 meeting. The economy is fine, it’s growing around 2%, has been growing around 2% for the last year. Market expectations are for another cut in either October or December, followed by an additional easing in early 2020. “I’m much less certain than the market seems to be that we need a whole bunch of decreases here,” he said. D
Former Fed Vice Chair Kohn backs rate cut, rejects Dudley suggestion to foil Trump Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-09-10  Authors: jeff cox
Keywords: news, cnbc, companies, trump, suggestion, kohn, fed, vice, dudley, rates, rejects, cut, rate, foil, trumps, market, thing, think


Former Fed Vice Chair Kohn backs rate cut, rejects Dudley suggestion to foil Trump

The Federal Reserve should cut interest rates next week and not listen to a suggestion that it consider keeping rates level to harm President Donald Trump’s re-election chances, former central bank Vice Chairman Donald Kohn said Tuesday.

In a CNBC interview, Kohn indicated he believes the Fed will follow market expectations and lower its benchmark overnight lending rate by 25 basis points at its Sept. 17-18 meeting.

“I think they have ample reason to do that. The economy is fine, it’s growing around 2%, has been growing around 2% for the last year. The unemployment rate is low,” he said on “Closing Bell.” “But there are downside risks there from the trade war and the global slowdown, and inflation is running a bit below their target.”

However, he said he’s not sure how far the policymaking Federal Open Market Committee should go beyond that.

Market expectations are for another cut in either October or December, followed by an additional easing in early 2020. The FOMC already has cut once this year, a 25 basis point reduction that was the first since 2008 after having raised the funds rate nine times since December 2015. The funds rate is currently targeted between 2% and 2.25%.

“So I think buying a bit more insurance is the right thing to do at this meeting. What I’m not so sure about is where they will be going after that,” he said.

“I’m much less certain than the market seems to be that we need a whole bunch of decreases here,” he said.

He did express certainty against a suggestion from former New York Fed President Bill Dudley, who argued in a Bloomberg Opinion piece that the FOMC should push back against Trump’s intense criticism of the Fed by not lowering rates. Doing so, Dudley wrote, might hamper Trump’s re-election which he called “a threat to the U.S. and global economy.”

“I thought it was wrong and harmful,” Kohn said of Dudley’s commentary. “The Fed needs to keep away from politics. They need to apply the best economic analysis possible to achieve legislative mandates.”

He said writing the piece was “a very dangerous thing to do.”

CNBC has reached out to Dudley for comment.


Company: cnbc, Activity: cnbc, Date: 2019-09-10  Authors: jeff cox
Keywords: news, cnbc, companies, trump, suggestion, kohn, fed, vice, dudley, rates, rejects, cut, rate, foil, trumps, market, thing, think


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Real US debt levels could be 2,000% of economy, a Wall Street report suggests

And larger levels of debt can be sustained so long as other conditions, like leverage levels, or debt to capital, are manageable. “Debt problems could, arguably would have, already happened at lower levels of debt if the macro conditions forced it.” ‘Profoundly negative effects’The warnings about potential debt hazards come as the total federal debt outstanding has surged to $22.5 trillion, or about 106% of GDP. 633%, which tallies up an “infinite horizon” of obligations for social programs, rat


And larger levels of debt can be sustained so long as other conditions, like leverage levels, or debt to capital, are manageable. “Debt problems could, arguably would have, already happened at lower levels of debt if the macro conditions forced it.” ‘Profoundly negative effects’The warnings about potential debt hazards come as the total federal debt outstanding has surged to $22.5 trillion, or about 106% of GDP. 633%, which tallies up an “infinite horizon” of obligations for social programs, rat
Real US debt levels could be 2,000% of economy, a Wall Street report suggests Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-09-09  Authors: jeff cox
Keywords: news, cnbc, companies, social, 2000, financial, levels, obligations, report, federal, public, programs, real, gdp, economy, street, suggests, debt, total, wall


Real US debt levels could be 2,000% of economy, a Wall Street report suggests

Total potential debt for the U.S. by one all-encompassing measure is running close to 2,000% of GDP, according to an analysis that suggests danger but also cautions against reading too much into the level. AB Bernstein came up with the calculation — 1,832%, to be exact — by including not only traditional levels of public debt like bonds but also financial debt and all its complexities as well as future obligations for so-called entitlement programs like Social Security, Medicare and public pensions. Putting all that together paints a daunting picture but one that requires nuance to understand. Paramount is realizing that not all of the debt obligations are set in stone, and it’s important to know where the leeway is, particularly in the government programs that can be changed either by legislation or accounting.

“This conceptual difference is important to acknowledge because this lens is often used by those who wish to paint a dire picture about debt,” Philipp Carlsson-Szlezak, chief U.S. economist at AB Bernstein, said in the report. “While the picture is dire, such numbers don’t prove we are doomed or that a debt crisis is inevitable.” Crisis measures cut both ways — sometimes a seemingly smaller level of debt can cause outsized problems during times of economic stress, such as during the financial crisis. And larger levels of debt can be sustained so long as other conditions, like leverage levels, or debt to capital, are manageable. The key is not always gross dollar amount but rather ability to pay. “U.S. debt is large. And it’s growing. But if we want to think about debt problems (in any sector – sovereign, households, firms or financials) the conditions rather than the levels are more significant,” Carlsson-Szlezak said. “Debt problems could, arguably would have, already happened at lower levels of debt if the macro conditions forced it.”

‘Profoundly negative effects’

The warnings about potential debt hazards come as the total federal debt outstanding has surged to $22.5 trillion, or about 106% of GDP. Excluding intragovernmental obligations, debt held by the public is $16.7 trillion, or 78% of GDP. That latter total, considered to be more relevant as an economic burden, is likely to rise to 105% by 2028, according to Congressional Budget Office projections. However, the CBO notes that the numbers are subject to revision depending on how government policies play out. Advocates for fiscal reform argue that the debt impact has indeed reached the point where action is necessary. “Globally, we have become over-reliant on borrowing as a solution for everything. Political excuses abound for why it doesn’t matter, which just clearly isn’t the case,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a bipartisan committee of legislators, business leaders and economists that counts former Federal Reserve Chairs Paul Volcker and Janet Yellen among its members. “We are quickly approaching a situation where we have dug ourselves a debt hole which is doing to have profoundly negative effects on the economy for probably decades going forward,” MacGuineas added. In its calculations, AB Bernstein pulls in debt from a variety of sources and compares it to GDP as follows: 100% of GDP using federal, state and local government debt combined.

150% for households and firms

450% for financial debt, which carries “conceptual issues and risks,” namely that debt held by financial firms often represents potential in a worst-case scenario involving various derivative instruments that can carry high notional levels that are unlikely ever to be realized.

27% in trusts for social insurance programs.

484%, which values all the promises from current social insurance programs.

633%, which tallies up an “infinite horizon” of obligations for social programs, rather than just the traditional 75 years used in computations.

Timing is everything

That total gets the debt load around the 2,000% mark, though Carlsson-Szlezak points out that different debt carries different risks. “A default on U.S. treasury bonds would be catastrophic to the global economy – whereas changes in policy (while painful for those whose future benefits were diminished) would barely register on the economic horizon,” he wrote. Impacts on individual parts of the economy would vary. Moody’s Investors Service recently warned that an already growing number of junk-rated companies could “swell dramatically” in the next downturn, “substantially increasing default risk.”


Company: cnbc, Activity: cnbc, Date: 2019-09-09  Authors: jeff cox
Keywords: news, cnbc, companies, social, 2000, financial, levels, obligations, report, federal, public, programs, real, gdp, economy, street, suggests, debt, total, wall


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Job growth falls short of expectations as August payrolls rise just 130,000

Job growth continued at a tepid pace in August, with nonfarm payrolls increasing by just 130,000 thanks in large part to the temporary hiring of Census workers, the Labor Department reported Friday. The increase fell short of Wall Street estimates for 150,000, while the unemployment rate stayed at 3.7%, as expected. An alternative measure of the jobless rate, which includes discouraged and underemployed workers, increased to 7.2% from 7% in July, due mainly to a 397,000 increase in those working


Job growth continued at a tepid pace in August, with nonfarm payrolls increasing by just 130,000 thanks in large part to the temporary hiring of Census workers, the Labor Department reported Friday. The increase fell short of Wall Street estimates for 150,000, while the unemployment rate stayed at 3.7%, as expected. An alternative measure of the jobless rate, which includes discouraged and underemployed workers, increased to 7.2% from 7% in July, due mainly to a 397,000 increase in those working
Job growth falls short of expectations as August payrolls rise just 130,000 Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-09-06  Authors: jeff cox, fred imbert
Keywords: news, cnbc, companies, payrolls, working, workers, unemployment, underemployed, growth, job, expectations, increased, increase, increasing, short, wall, rise, 130000, falls, rate


Job growth falls short of expectations as August payrolls rise just 130,000

Job growth continued at a tepid pace in August, with nonfarm payrolls increasing by just 130,000 thanks in large part to the temporary hiring of Census workers, the Labor Department reported Friday.

The increase fell short of Wall Street estimates for 150,000, while the unemployment rate stayed at 3.7%, as expected. An alternative measure of the jobless rate, which includes discouraged and underemployed workers, increased to 7.2% from 7% in July, due mainly to a 397,000 increase in those working part-time for economic reasons.

Wage growth remained solid, with average hourly earnings increasing by 0.4% for the month and 3.2% over the year; both numbers were one-tenth of a percentage point better than expected.

Labor force participation also increased, rising to 63.2% and tying its highest level since August 2013. The total number of Americans considered employed surged by 590,000 to a record 157.9 million, according to the household survey, which is conducted separately from the headline establishment count.

The difference between the two surveys inspired some optimism.


Company: cnbc, Activity: cnbc, Date: 2019-09-06  Authors: jeff cox, fred imbert
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Panic at Newark Airport terminal after airline worker’s evacuation order sends travelers running

Travelers at Newark Airport were given an intense scare Monday night, as some on social media said they were told to quickly evacuate. The panic was sparked around 8:30 p.m. after passengers in Terminal A, including some who were about to board their flights, were told to leave the airport by nervous airline attendants, people on social media claimed. She grew concerned after talking with them, so she hit an alarm and told people to evacuate, the spokesman said. Between 150-200 passengers quickl


Travelers at Newark Airport were given an intense scare Monday night, as some on social media said they were told to quickly evacuate. The panic was sparked around 8:30 p.m. after passengers in Terminal A, including some who were about to board their flights, were told to leave the airport by nervous airline attendants, people on social media claimed. She grew concerned after talking with them, so she hit an alarm and told people to evacuate, the spokesman said. Between 150-200 passengers quickl
Panic at Newark Airport terminal after airline worker’s evacuation order sends travelers running Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-09-03  Authors: jacob pramuk, jeff cox
Keywords: news, cnbc, companies, evacuation, quickly, left, travelers, running, panic, media, newark, airport, social, passengers, order, told, workers, terminal, video, sends


Panic at Newark Airport terminal after airline worker's evacuation order sends travelers running

Travelers at Newark Airport were given an intense scare Monday night, as some on social media said they were told to quickly evacuate.

The panic was sparked around 8:30 p.m. after passengers in Terminal A, including some who were about to board their flights, were told to leave the airport by nervous airline attendants, people on social media claimed.

An official with Port Authority said that a flight attendant with Alaska Airlines approached two men at Gate 30. She grew concerned after talking with them, so she hit an alarm and told people to evacuate, the spokesman said.

Between 150-200 passengers quickly fled the area. Police were at the scene shortly after, as frightened flyers left the terminal so quickly many left behind their luggage, pictures and video showed. Some travelers evacuated onto the tarmac outside the airport’s gates.


Company: cnbc, Activity: cnbc, Date: 2019-09-03  Authors: jacob pramuk, jeff cox
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At least 5 dead as ‘nearly stationary’ Hurricane Dorian pounds the northern Bahamas

Delray Beach police officer, Matt Warne, informs a driver that the road to the beach is only open to residents as Hurricane Dorian continues to make its way toward the Florida coast on September 02, 2019 in Delray Beach, Florida. Hurricane Dorian all but halted Monday afternoon as it pounded the northwestern Bahamas and the southeastern U.S. braced for bruising winds and rain. Although the storm was downgraded to a Category 4, the forecaster said Dorian is “still very much an extremely dangerous


Delray Beach police officer, Matt Warne, informs a driver that the road to the beach is only open to residents as Hurricane Dorian continues to make its way toward the Florida coast on September 02, 2019 in Delray Beach, Florida. Hurricane Dorian all but halted Monday afternoon as it pounded the northwestern Bahamas and the southeastern U.S. braced for bruising winds and rain. Although the storm was downgraded to a Category 4, the forecaster said Dorian is “still very much an extremely dangerous
At least 5 dead as ‘nearly stationary’ Hurricane Dorian pounds the northern Bahamas Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-09-02  Authors: jacob pramuk jeff cox, jacob pramuk, jeff cox
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At least 5 dead as 'nearly stationary' Hurricane Dorian pounds the northern Bahamas

Delray Beach police officer, Matt Warne, informs a driver that the road to the beach is only open to residents as Hurricane Dorian continues to make its way toward the Florida coast on September 02, 2019 in Delray Beach, Florida.

Hurricane Dorian all but halted Monday afternoon as it pounded the northwestern Bahamas and the southeastern U.S. braced for bruising winds and rain.

The storm killed at least five people in the Abaco Islands, the first area it tore through, Prime Minister Hubert Minnis said Monday. He said “we are in the midst of a historic tragedy.”

After making landfall in Abaco on Sunday, the hurricane’s movement slowed until it was “nearly stationary” Monday as it thrashed Grand Bahama Island, the National Weather Service said. Although the storm was downgraded to a Category 4, the forecaster said Dorian is “still very much an extremely dangerous storm.”

Earlier winds had reached as much as 220 miles per hour, matching the strongest Atlantic hurricane ever to make landfall, according to the Associated Press. Maximum sustained winds weakened to 145 mph by Monday afternoon, the National Hurricane Center said. Dorian is expected to pummel the island until Tuesday morning. Earlier, the forecaster said the hurricane was “causing extreme destruction,” with storm surges 18 to 23 feet above normal levels.

Videos shared from the Bahamas showed waves surging across the airport in Freeport, Bahamas. Furniture floated in houses inundated with water.

Cars sat mostly submerged as wind whipped around them, and some locals navigated streets in boats, according to images and videos shared by state-owned broadcaster ZNS Bahamas.

“From all accounts we have received catastrophic damage,” Foreign Minister Darren Henfield told ZNS. “We have reports of casualties, we have reports of bodies being seen. We cannot confirm those reports until we go out and have a look for ourselves.”

Henfield was speaking from Abaco, where the International Red Cross estimates nearly 13,000 homes may have been severely damaged or destroyed. The group said fresh water will become an important need due to the contimination from saltwater as a result of the extensive flooding.

The storm was about 105 miles (170 km) east of West Palm Beach, Florida, on Monday at 5 p.m. EDT — roughly where it was hours earlier. The outer bands of the storm are forecast to begin reaching the Florida coast by Monday, before turning and heading northward along the coastline. The NHC cautioned about “life-threatening flash floods” as the hurricane made its way up the coastline.

Residents of parts of Florida, Georgia and South Carolina evacuated as they prepared for the storm’s approach. The states’ governors ordered at least a million people to evacuate starting Monday, according to NBC News.

Georgia’s government estimates the mandatory evacuation orders affect 400,000 people in the state. The orders focus on six coastal counties in Georgia.


Company: cnbc, Activity: cnbc, Date: 2019-09-02  Authors: jacob pramuk jeff cox, jacob pramuk, jeff cox
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Ray Dalio warns of ‘serious problems’ and a bond ‘blow-off’ as a repeat of the late 1930s looms

Hedge fund titan Ray Dalio is worried that the current landscape is starting to resemble Depression-era conditions that could hammer investors. In a LinkedIn post Thursday, the billionaire Bridgewater Associates founder said high levels of debt and central banks’ ineffectiveness are two of the key factors that need watching. The U.S.-China conflict is adding to the problems as an existing power battles an emerging one. “If/when there is an economic downturn, that will produce serious problems in


Hedge fund titan Ray Dalio is worried that the current landscape is starting to resemble Depression-era conditions that could hammer investors. In a LinkedIn post Thursday, the billionaire Bridgewater Associates founder said high levels of debt and central banks’ ineffectiveness are two of the key factors that need watching. The U.S.-China conflict is adding to the problems as an existing power battles an emerging one. “If/when there is an economic downturn, that will produce serious problems in
Ray Dalio warns of ‘serious problems’ and a bond ‘blow-off’ as a repeat of the late 1930s looms Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-30  Authors: jeff cox
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Ray Dalio warns of 'serious problems' and a bond 'blow-off' as a repeat of the late 1930s looms

Hedge fund titan Ray Dalio is worried that the current landscape is starting to resemble Depression-era conditions that could hammer investors.

In a LinkedIn post Thursday, the billionaire Bridgewater Associates founder said high levels of debt and central banks’ ineffectiveness are two of the key factors that need watching. The U.S.-China conflict is adding to the problems as an existing power battles an emerging one.

“If/when there is an economic downturn, that will produce serious problems in ways that are analogous to the ways that the confluence of those three influences produced serious problems in the late 1930s,” Dalio wrote.


Company: cnbc, Activity: cnbc, Date: 2019-08-30  Authors: jeff cox
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Companies may be terrified of tariffs, but consumers clearly aren’t

At a time when the tariff battle occupies much of the market’s attention, consumers seem to be largely disregarding the issue. The latest evidence of a resilient consumer comes from the July spending numbers, which showed a 0.6% monthly gain in personal spending even amid a more tepid 0.1% rise in personal income. While corporate America frets over the impact the U.S.-China trade war will have on future costs, consumer just keep right on rolling. Faucher said he doesn’t expect the current strong


At a time when the tariff battle occupies much of the market’s attention, consumers seem to be largely disregarding the issue. The latest evidence of a resilient consumer comes from the July spending numbers, which showed a 0.6% monthly gain in personal spending even amid a more tepid 0.1% rise in personal income. While corporate America frets over the impact the U.S.-China trade war will have on future costs, consumer just keep right on rolling. Faucher said he doesn’t expect the current strong
Companies may be terrified of tariffs, but consumers clearly aren’t Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-30  Authors: jeff cox
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Companies may be terrified of tariffs, but consumers clearly aren't

At a time when the tariff battle occupies much of the market’s attention, consumers seem to be largely disregarding the issue.

The latest evidence of a resilient consumer comes from the July spending numbers, which showed a 0.6% monthly gain in personal spending even amid a more tepid 0.1% rise in personal income. That comes on top of data earlier in the week indicating that personal consumption rose 4.7% in the second quarter and saving compared to disposable income edging lower, from 8% to 7.7%.

While corporate America frets over the impact the U.S.-China trade war will have on future costs, consumer just keep right on rolling.

“Despite the concerns about the ongoing trade war between the U.S. and China and slower global economic growth, consumers remain in good shape, continuing to push the U.S. economy forward,” Gus Faucher, chief economist at PNC, said in a note.

The increased spending did not come, as might be expected, with a jump in inflation. The core personal consumption expenditures price index, which strips out food and energy, rose just 1.6% annualized, while the headline number was up a mere 1.4%, according to Commerce Department figures.

That’s well below the Federal Reserve’s target, though the three-month average was right on the 2% level that the central bank considers healthy.

“Net, net, the economy is riding high on the backs of the consumer who is hitting the shops and malls with credit cards out and clearing the store shelves of all that retailers have got this summer,” wrote Chris Rupkey, chief financial economist at MUFG Union Bank. “The consumer isn’t worried, sitting at home watching the political debates concerned about the country’s direction, they are out shopping and dipping into their savings to do it.”

The main question now will be how long it can last.

Faucher said he doesn’t expect the current strong pace to hold up as the trade war continues, particularly if the jobs market starts to weaken. While payrolls rose 164,000 in July, hours worked declined, sparking some concern of an early sign that the decadelong hiring boom was unwinding.

Friday’s data menu also came with some bad news — the closely watched University of Michigan consumer sentiment measure for August was revised lower to 89.8, representing a 9.8-point tumble that was the biggest monthly slide since December 2012.

Indeed, companies and analysts are more concerned about the future than consumers.

The Goldman Sachs Analyst Index, which surveys equity analysts on business conditions across multiple categories, fell to a two-year low in August. Its reading of 48.2 reflects economic contraction and showed across-the-board weakness fueled by tariff concerns.

“Analyst commentary suggests that further tariff escalation has ‘dampened [the] outlook’ for some sectors. Several responses indicated that some companies are rerouting supply chains and relocating production to mitigate exposure to the trade war,” Goldman economist Ronnie Walker wrote.

Still, signs of a recession appear distant, despite what the bond market and its inverted yield curve might be suggesting.

The Atlanta Fed is tracking third quarter GDP at 2.3% following a 2% gain in Q2. After-tax income continues to rise, gaining 3% annualized in July.

“The trade dispute with China may be escalating at a rapid pace but, despite the concerns of Fed officials, there is still little evidence that this is having a significant impact on the economy,” said Andrew Hunter, senior U.S. economist at Capital Economics.

One of the more bearish forecasting firms, Capital has taken up its Q3 growth estimate to 2% from 1.5%, though it still, like most of its peers, doesn’t think that will derail the Fed from again cutting interest rates in September.

“The direct impact of those tariffs should be manageable, but there is risk that uncertainty over the outcome of the conflict starts to weigh more heavily on the economy,” Hunter wrote. “So far, however, there is only limited evidence of that in the data.”


Company: cnbc, Activity: cnbc, Date: 2019-08-30  Authors: jeff cox
Keywords: news, cnbc, companies, economist, consumer, war, economy, companies, terrified, clearly, tariffs, rose, income, spending, consumers, arent, trade, personal, tariff


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The Fed’s efforts to stay out of politics just got a lot tougher this week

What results is that the Fed and its long-held independence crucial to its decision-making are facing a test perhaps like never before. “What I sense in the last few days is a growing desire among current and former Fed officials to fight back.” Reaction is swiftThe commentary drew widespread attention around Wall Street and on social media, most of it was negative. And Ed Yardeni, founder of Yardeni Research, marveled at just how far the public scrutiny of Fed actions has gone. Dudley, a regist


What results is that the Fed and its long-held independence crucial to its decision-making are facing a test perhaps like never before. “What I sense in the last few days is a growing desire among current and former Fed officials to fight back.” Reaction is swiftThe commentary drew widespread attention around Wall Street and on social media, most of it was negative. And Ed Yardeni, founder of Yardeni Research, marveled at just how far the public scrutiny of Fed actions has gone. Dudley, a regist
The Fed’s efforts to stay out of politics just got a lot tougher this week Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-28  Authors: jeff cox
Keywords: news, cnbc, companies, tougher, political, week, powell, yellen, fed, rate, central, public, commentary, feds, lot, trump, stay, politics, efforts, dudley


The Fed's efforts to stay out of politics just got a lot tougher this week

If there had been any doubt that the Federal Reserve is under unprecedented political pressure, this week’s incendiary commentary from former New York Fed President William Dudley cemented the notion. Where once the heat had been coming primarily from President Donald Trump and his demand for rate cuts, the latest round emanated from the other side — a prominent one-time central banker who urged defiance and even tried to nudge the central bank into a political fray that its members have been trying assiduously to avoid. What results is that the Fed and its long-held independence crucial to its decision-making are facing a test perhaps like never before.

“Everything they say and everything they do is going to be viewed through the prism of this titanic battle,” said Greg Valliere, chief global strategist at AGF and a veteran markets and politics analyst. “What I sense in the last few days is a growing desire among current and former Fed officials to fight back.” Dudley’s comments came amid a series of public statements that are out of character for normally staid central bankers who have a long history of not using public forums to tell each other what to do. For instance, former Fed Chair Janet Yellen, Powell’s immediate predecessor, recently said the Fed should consider a rate cut, just days before Powell and Co. did just that. Earlier this month, Yellen and former chairmen, Alan Greenspan Ben Bernanke and Paul Volcker penned a remarkable op-ed for the Wall Street Journal stressing the need for an independent Fed free of political pressure. While the missive did not mention Trump and his criticisms specifically, the intention was clear. Of course, it’s also unusual for presidents to criticize the Fed as forcefully as Trump has, though his frequent tweets hammering at Fed Chairman Jerome Powell and his colleagues have quickly become routine. But Dudley’s commentary for Bloomberg Opinion seemed to put the dialogue on a different plane. He is someone who held one of the Fed’s most influential positions and not only stated a position on rate cuts — he’s against — but also encouraged holding the line as a way to spite Trump and perhaps torpedo his re-election chances next year. “After all, Trump’s reelection arguably presents a threat to the U.S. and global economy, to the Fed’s independence and its ability to achieve its employment and inflation objectives. If the goal of monetary policy is to achieve the best long-term economic outcome, then Fed officials should consider how their decisions will affect the political outcome in 2020,” he wrote.

Reaction is swift

The commentary drew widespread attention around Wall Street and on social media, most of it was negative. Hedge fund titan Kyle Bass called Dudley “rogue.” Bear Traps Report founder Lawrence McDonald wondered if Dudley was speaking for more than himself and perhaps was representing the sentiment of Powell and others at the Fed. And Ed Yardeni, founder of Yardeni Research, marveled at just how far the public scrutiny of Fed actions has gone. “I am almost speechless,” he wrote in his morning note to clients Wednesday. “Dudley may be calling on the Fed to join the resistance and to fight fire with fire, but that would be playing with fire for the Fed. Welcome to the New Abnormal, where everyone loses their minds! Trump has the amazing ability to make sane people go insane.” The essay also elicited a rare public response from the Fed to criticism, with a spokesman saying that “political considerations play absolutely no role” in making monetary policy. Dudley, a registered Democrat and former Goldman Sachs economist, did not respond to a request for further comment.

Powell ‘just has to blow it off’


Company: cnbc, Activity: cnbc, Date: 2019-08-28  Authors: jeff cox
Keywords: news, cnbc, companies, tougher, political, week, powell, yellen, fed, rate, central, public, commentary, feds, lot, trump, stay, politics, efforts, dudley


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