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Strong jobs, weak inflation data muddy Fed rate debate: minutes

U.S. Federal Reserve officials widely agreed last month the economy was nearing the point where interest rates should move higher, but worried lagging inflation and a weak global economy posed too big a risk to commit to "liftoff." Only one Fed policymaker was ready to vote for a rate hike at the central bank’s July 28-29 policy meeting, while some others "viewed the economic conditions for beginning to increase the target range for the federal funds rate as having been met or were confident that they would be met shortly," according to minutes from the meeting released on Wednesday. "Most judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point," the minutes said. That sentiment, combined with a broader recognition among "many members" that full employment was close, led the Fed to say in its post-meeting statement that […]

Posted On : Published By : Tom Whipple
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Approaching A Global Deflationary Crisis?

Anyone with any sense for global economic trends ought to be worried. The signs are everywhere of a serious deflationary crisis. It is obvious that Chinese growth is falling. The prices for energy and the raw materials that feed the growth economy keep falling. The demand for Chinese exports is down too. Stock Markets in Asia are falling, despite attempts to prop them up. Countries are being tempted to export their problems abroad – for example by competitive devaluation. In Europe its obvious that a “solution” is being cobbled together for the Euro and Greek crisis even though no one at all believes that it will work. At the same time the policy response of “quantitative easing” which has kept interest rates down very low has reached the end of the road. With interest rates at or near to zero the scope for addressing the crisis through monetary policy […]

Posted On : Published By : Tom Whipple
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India, Russia And Thailand Prepare For Currency War

When China sneezes, the world catches a cold. Alternatively, when China devalues, the rest of the (exporting) world scrambles to not be the last (exporting) nation standing, and to do so next, before everyone else does. Case in point, at least three major emerging market nations announced they are bracing for currency war. First India, where NDTV ask rhetorically “ How China’s Devaluation of Renminbi Impacts India ” and answers: 1) The Indian rupee slipped to a two-month low of 64.26 against the US dollar on Tuesday tracking the devaluation of the renminbi . Other currencies such as the Australian dollar and the South Korean won also lost ground. 2) The over 0.5 per cent fall in the rupee weighed on traders’ sentiments, resulting in a drop in equity markets. Both the BSE Sensex and the Nifty traded with 0.4 per cent losses. 3) According to SV Prasad of […]

Posted On : Published By : Tom Whipple
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Europe Stocks Fall Third Day as Energy Drop Outweighs Tech Gain

European stocks declined for a third day as sliding energy shares outweighed a rebound in tech companies. The Stoxx Europe 600 Index dropped 0.4 percent to 395.63 at 10:25 a.m. in London. Tumbling media companies pulled European stocks down on Friday, while U.S.-payrolls data fueled bets the Federal Reserve will raise rates this year. Stocks gained 0.2 percent last week. Greece’s ASE Index extended its rebound to three days today, advancing 0.8 percent for the best performance among western-European markets. “While the fall in commodity prices, especially oil, could help European markets in the medium term, on a first look it’s a bad sign for a cyclical upturn,” said Christian Zogg, a fund manager who helps oversee about $10 billion at LLB Asset Management in Vaduz, Liechtenstein. “The nearer we get to the first Fed move, the more nervous the market gets, but best guess is it will stay […]

Posted On : Published By : Tom Whipple
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July job gains may favor September interest rate rise

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. The number of U.S. jobs probably rose at a healthy pace in July and wages likely rebounded in data due on Friday, providing further signs of an improving economy that could allow the Federal Reserve to raise interest rates in September. A Reuters survey of economists forecast U.S. nonfarm payrolls increased by 223,000 last month, matching June’s job gains, a number which would be slightly above the monthly average for the first half of the year. Though the pace of hiring has slowed from last year, it remains double the rate needed to keep up with population growth. The Labor Department will release its closely watched employment report on Friday at 8:30 a.m. (1230 GMT) "We expect this report […]

Posted On : Published By : Tom Whipple
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July job gains may favor September interest rate rise

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. The number of U.S. jobs probably rose at a healthy pace in July and wages likely rebounded in data due on Friday, providing further signs of an improving economy that could allow the Federal Reserve to raise interest rates in September. A Reuters survey of economists forecast U.S. nonfarm payrolls increased by 223,000 last month, matching June’s job gains, a number which would be slightly above the monthly average for the first half of the year. Though the pace of hiring has slowed from last year, it remains double the rate needed to keep up with population growth. The Labor Department will release its closely watched employment report on Friday at 8:30 a.m. (1230 GMT) "We expect this report […]

Posted On : Published By : Tom Whipple
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U.S. Bankruptcy Filings Jump 77% in July, Paced by Energy Sector

Newly released numbers bear out the feeling that a long-awaited bump in bankruptcy filings has arrived this summer, as submissions under chapter 11 rose 77% in July. There were 637 filings under chapter 11 of the bankruptcy code last month across the U.S., according to statistics from Epiq Systems, compared with 359 at the same time last year. It is the most monthly new chapter 11 filings in nearly three years. That excludes April 2014, an outlier month during a very slow restructuring year, when a spike was driven by Energy Future Holdings Corp.’s massive 71-petition filing. But the summer pickup in filings might not be a permanent return to the time before low-interest rates and high filing costs kept many away from the bankruptcy courts. Shaunna Jones, bankruptcy lawyer at Willkie Farr & Gallagher LLP described this summer as one that has “pockets of business but still feels […]

Posted On : Published By : Tom Whipple
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July job gains may favor September interest rate rise

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. The number of U.S. jobs probably rose at a healthy pace in July and wages likely rebounded in data due on Friday, providing further signs of an improving economy that could allow the Federal Reserve to raise interest rates in September. A Reuters survey of economists forecast U.S. nonfarm payrolls increased by 223,000 last month, matching June’s job gains, a number which would be slightly above the monthly average for the first half of the year. Though the pace of hiring has slowed from last year, it remains double the rate needed to keep up with population growth. The Labor Department will release its closely watched employment report on Friday at 8:30 a.m. (1230 GMT) "We expect this report […]

Posted On : Published By : Tom Whipple
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U.S. Economy Grew at 2.3% Rate in 2nd Quarter

Photo A Ford Motor worker at the company’s Chicago assembly plant. Many automakers reported higher sales in their latest earnings reports. Credit M. Spencer Green/Associated Press In a common pattern of the last few years, the American economy, after a dismal start to 2015, regained its footing in the spring and looked set to continue a modest advance for the rest of the year. But the lackluster data last quarter and a slight downward revision of the estimated growth rate over the last three years underscored the challenges that still lie ahead for an economy that doesn’t seem to be able to move ahead at more than a slow jog. The rebound in April, May and June was largely expected, but the 2.3 percent annualized rate, adjusted for inflation, the Commerce Department reported on Thursday in its initial estimate was a bit below what economists on Wall Street predicted […]

Posted On : Published By : Tom Whipple