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U.S. employment seen raising December rate hike chances

A job seeker holds literature while waiting to speak with a representative of the Golden Gate National Parks Conservancy at a career fair in San Francisco, California July 14, 2015. U.S. job growth likely accelerated in October after two straight months of tepid gains, with wages also picking up in a show of domestic strength that would bolster prospects for a December interest rate hike from the Federal Reserve. A Reuters survey forecast nonfarm payrolls increasing 180,000, well above the 139,000 jobs per month average for August and September. Should payroll gains meet expectations, it would add to robust automobile sales in painting an upbeat picture of the economy at the start of the fourth quarter. With speeches from several Fed officials, including Chair Janet Yellen, suggesting a low bar for a December rate increase, economists say job gains above 150,000 in October and November would be sufficient for […]

Posted On : Published By : Tom Whipple
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U.S. factory orders fall for second straight month

An Airbus A321 is being assembled in the final assembly line hangar at the Airbus U.S. Manufacturing Facility in Mobile, Alabama September 13, 2015. New orders for U.S. factory goods fell for a second straight month in September as the manufacturing sector continues to struggle under the weight of a strong dollar and deep spending cuts by energy companies. The Commerce Department said on Tuesday new orders for manufactured goods declined 1.0 percent after a downwardly revised 2.1 percent drop in August. Factory activity, which accounts for about 12 percent of the economy, is also being constrained by efforts by businesses to reduce an inventory overhang and tepid global demand. But the worst could be over for the sector after a report on Monday showed new orders rose in October for the first time since July. Economists polled by Reuters had forecast factory orders falling 0.9 percent in September […]

Posted On : Published By : Tom Whipple
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U.S. rail freight falls as industrial economy struggles

Railroad cars are seen in Pittsburgh, Pennsylvania April 8, 2011. Freight carried by major U.S. railroads fell by 7 percent in the second quarter of 2015 compared with the same period in 2014, confirming that large parts of the industrial economy are in recession. The major Class 1 railroads carried 431 billion ton-miles of freight in the three months ending June, down from 463 billion ton-miles in 2014, according to the U.S. Surface Transportation Board. Changes in freight volumes reflect broader difficulties in the industrial economy. Rail operators have been struck by a perfect storm which has hit both their traditional and new business lines. Coal shipments to power plants, the biggest commodity on the network, accounting for about one-third of total tonnage, have been hit by a combination of environmental regulations and low gas prices. Coal shipments were down by 27 million tonnes, around 15 percent, in the […]

Posted On : Published By : Tom Whipple
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U.S. manufacturing slows; construction spending at 7-1/2-year high

An SUV moves through the assembly line at the General Motors Assembly Plant in Arlington, Texas June 9, 2015. U.S. manufacturing activity slowed in October for a fourth straight month, but a rise in new orders offered hope for a sector buffeted by a strong dollar and relentless spending cuts by energy companies. Other data on Monday showed construction spending rose in September, indicating the economy remained on firmer ground despite some cooling in consumer spending and persistent weakness in manufacturing. The Institute for Supply Management said its national manufacturing index slipped to 50.1 this month from a reading of 50.2 in September. A reading above 50 indicates expansion in the manufacturing sector. New orders rose to 52.9 from 50.1 in September. However, the employment index fell to 47.6, the lowest reading since August 2009. It was the first time it had dropped below 50 since April. U.S. stocks […]

Posted On : Published By : Tom Whipple
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Inside the Secretive Circle That Rules a $14 Trillion Market

Fifteen of the biggest players in the $14 trillion market for credit insurance are also the referees. Firms such as JPMorgan Chase & Co. and Goldman Sachs Group Inc. wrote the rules, are the dominant buyers and sellers and, ultimately, help decide winners and losers. Has a country such as Argentina paid what it owes? Has a company like Caesars Entertainment Corp. kept up with its bills? When the question comes up, the 15 firms meet on a conference call to decide whether a default has triggered a payout of the bond insurance, called a credit-default swap. Investors use CDS to protect themselves from missed debt payments or profit from them. Once the 15 firms decide that a default has taken place, they effectively determine how much money will change hands. And now, seven years after the financial crisis first brought CDS to widespread attention, pressure is growing inside […]

Posted On : Published By : Tom Whipple
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Global Trade Is Collapsing

When the global economy is doing well, the amount of stuff that is imported and exported around the world goes up, and when the global economy is in recession, the amount of stuff that is imported and exported around the world goes down. It is just basic economics. Governments around the world have become very adept at manipulating other measures of economic activity such as GDP, but the trade numbers are more difficult to fudge. Today, China accounts for more global trade than anyone else on the entire planet, and we have just learned that Chinese exports and Chinese imports are both collapsing right now. But this is just part of a larger trend. As I discussed the other day , British banking giant HSBC has reported that total global trade is down 8.4 percent so far in 2015, and global GDP expressed in U.S. dollars is down 3.4 […]

Posted On : Published By : Tom Whipple
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U.S. Companies Warn of Slowing Economy

Quarterly profits and revenue at big American companies are poised to decline for the first time since the recession, as some industrial firms warn of a pullback in spending. From railroads to manufacturers to energy producers, businesses say they are facing a protracted slowdown in production, sales and employment that will spill into next year. Some of them say they are already experiencing a downturn. “The industrial environment’s in a recession. I don’t care what anybody says,” Daniel Florness, chief financial officer of Fastenal Co. FAST 1.33 % , told investors and analysts earlier this month. A third of the top 100 customers for Fastenal’s nuts, bolts and other factory and construction supplies have cut their spending by more than 10% and nearly a fifth by more than 25%, Mr. Florness said. The weakness is overshadowing pockets of growth in sectors such as aerospace and technology. Industrial companies are […]

Posted On : Published By : Tom Whipple
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Investors lurch backwards on US rate rise expectations

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U.S. Consumer Prices Fall, Clouding Fed Rate Decision

The Federal Reserve’s policy dilemma deepened Thursday with new data showing a persistently sluggish pace of inflation, held down largely by lower gas prices. U.S. consumer prices fell in September, driven by the drop in gasoline prices. The consumer-price index, which measures what Americans pay for everyday goods and services, fell a seasonally adjusted 0.2% in September, the second straight month of overall price declines, the Labor Department said. The monthly pace of inflation has been steadily falling since May, when renewed weakness in gas prices took hold. Prices were unchanged over the past year, but gasoline prices have fallen 29.6% during that time, the department said. Besides cheaper gas, consumer prices have been held down by the strong dollar, which makes imports cheaper for Americans. Excluding the volatile food and energy categories, prices rose a relatively firm 0.2% in the month and a moderately healthy 1.9% over the […]

Posted On : Published By : Tom Whipple