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Dollar Slightly Stronger After Fed Meeting

The dollar rose against the euro and the yen on Wednesday after the Federal Reserve signaled that U.S. short-term interest rates could rise in the coming months. The Federal Open Market Committee painted a strong picture of the U.S. labor market at the conclusion of its two-day policy-setting meeting. The Fed said job gains have been solid, noted how unemployment had declined and upgraded its assessment of the slack in the job market. Consequently, the dollar increased versus the common currency, as one euro bought $1.1029, from $1.1044 ahead of the Fed’s statement, leaving the buck 0.3% higher for the session. The dollar edged higher against the yen to ¥123.78 from ¥123.75 beforehand, now trading 0.2% up on the day. Even though the Fed did not send a clear signal for timing on a rate increase, keeping a September timeline open for the Fed’s first interest-rate increase in more […]

Posted On : Published By : Tom Whipple
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Gain in U.S. Equipment Orders Points to Investment Rebound

American factories received more orders for capital goods such as machinery and fabricated metals in June, a sign business investment is poised to recover from an early-year malaise. Bookings for non-military equipment excluding planes climbed 0.9 percent, just the second gain this year, after decreasing 0.4 percent in May, data from the Commerce Department showed Monday in Washington. Orders for all durable goods — items meant to last at least three years — increased 3.4 percent, led by a rebound in commercial aircraft demand. The worst of the weakness for manufacturers may be over after the energy industry promptly adjusted to lower oil prices and other U.S. companies look to expand. Resilient consumer spending, particularly on automobiles, is helping make up for weaker overseas demand as a stronger dollar makes American-built goods more expensive. “We’re seeing domestic activity continue to push through, despite the headwinds of sluggish global growth […]

Posted On : Published By : Tom Whipple
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Cheap Oil Is Bad for the Economy (at Least, So Far)

It’s been about a year since oil prices started their historic drop, falling from above $100 a barrel to a bottom of about $45 in March. After creeping back to around $60, prices are shaky again amid news of a nuclear deal with Iran and record Saudi production. And low oil prices are good for growth, right? Cheap oil means cheap gasoline, and the assumption throughout the oil price rout has been that for the U.S. economy, built on consumer spending, cheap gas is all good. In theory, yes. In practice, it’s been tough to find the benefits in the economic data this year. Goldman Sachs estimates that a decline in energy-related investment such as new drilling equipment, caused by low oil prices, subtracted about half a percentage point from economic growth during the first half. That’s a pretty hefty bite out of a growth number that probably won’t […]

Posted On : Published By : Tom Whipple
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U.S. companies expected to report worst sales fall in nearly six years

A trader waits for news while working on the floor of the New York Stock Exchange following a halt in trading in New York, July 8, 2015. U.S. companies are expected to report their worst sales decline in nearly six years when they post second-quarter results, giving investors reason to worry about future profits. Companies have managed to drive 2015 earnings by cutting costs, a practice they turned to during the financial crisis. They have also used share buybacks to lift earnings per share. But it is hard to make a case for sustained earnings growth given forecasts for a second-straight quarter of revenue decline at S&P 500 companies, which begin reporting financial results in earnest this week. Though analysts expect corporate America to show a decline in second-quarter profits, according to Thomson Reuters data, some strategists expect them to defy those forecasts and eke out a gain, just […]

Posted On : Published By : Tom Whipple
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Greek, Chinese and Puerto Rican Crises All Fall Short of Going Global

After economic turmoil erupted on three continents in recent weeks, a familiar consequence of past crises is notably absent: panic. In Europe, Greece veered dangerously close to exiting the euro. In China, a historic stock bubble appears to be deflating. In North America, Puerto Rico threatens one of the biggest government defaults in U.S. history. But there has been little of the global contagion that followed the deepening U.S. mortgage crisis in the fall of 2008 and previous Greek debt crises. On Friday, the Dow Jones Industrial Average, responding to signs that Greece may yet strike a deal to stay in the euro, climbed to within 3% of its all-time high. VIX, the stock market’s “fear gauge,” is below levels reached as recently as last December. Yields on bonds issued by Europe’s weaker countries have edged up, but by far less than Greece’s. Federal Reserve Chairwoman Janet Yellen , […]

Posted On : Published By : Tom Whipple
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U.S. jobless claims rise to highest level since February

Job seekers listen to prospective employers during a job hiring event for marketing, sales and retail positions in San Francisco, California, in this file photo taken June 4, 2015. New applications for U.S. unemployment insurance benefits rose last week to their highest level since February, suggesting some slowdown in the labor market recovery. Initial claims for state unemployment benefits rose 15,000 to a seasonally adjusted 297,000 for the week that ended July 4, the U.S. Department of Labor said on Thursday. Even with the rise in claims, the latest report marks the 18th consecutive week of new filings below 300,000, which is considered consistent with a firming labor market. The previous week’s claims were revised to 282,000, showing that 1,000 more people filed than initially reported. Economists polled by Reuters had expected new applications to fall to 275,000 last week. The four-week moving average of claims, which smoothes out […]

Posted On : Published By : Tom Whipple
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U.S. industrial output hurt by weakness in manufacturing, mining

WASHINGTON U.S. industrial production unexpectedly fell in May as manufacturing and mining activity remained weak, a sign that a strong dollar and spending cuts in the energy sector continued to constrain economic growth. The softness in the production side of the economy contrasts starkly with recent upbeat data on retail sales, employment, consumer and small business confidence, which have pointed to a growth pickup after a sluggish start to the second quarter. "Signs of spring remain largely absent in the industrial sector. The challenges of the stronger dollar and drop in energy prices linger," said Tim Quinlan, an economist at Wells Fargo Securities in Charlotte, North Carolina. Industrial output slipped 0.2 percent last month after declining 0.5 percent in April, the Federal Reserve said on Monday. Industrial production has been weak since December, and economists had expected output to rise 0.2 percent last month. The data was likely to […]

Posted On : Published By : Tom Whipple
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Energy job losses mount, but sector recovering

Federal data show the extractive industries suffering in weak crude oil market, though career firm Challenger, Grey & Christmas finds silver lining. UPI/Maryam Rahmanian WASHINGTON, June 5 (UPI) — The number of people seeking unemployment assistance in May in the U.S. extractive industries was up by nearly 5 percentage points year-on-year, federal data show. The Bureau of Labor Statistics reported an unemployment rate of 7.2 percent in May for the mining, quarrying, and oil and gas extraction sectors. That’s up from the 2.6 percent reported in May 2014. Of all non-farm sectors surveyed by the bureau, the extractive industries were the lone standout in terms of job losses year-on-year. "Total non-farm payroll employment increased by 280,000 in May, and the unemployment rate was essentially unchanged at 5.5 percent," Friday’s report read. A report from this week from career transition firm Challenger, Grey & Christmas finds the employment climate in […]

Posted On : Published By : Tom Whipple
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Sluggish factory growth in Europe and Asia puts central bank stimulus in spotlight

LONDON/SYDNEY Manufacturing activity showed scant sign of picking up across Europe and Asia in May as demand stayed stubbornly weak, highlighting the need for central banks to continue supporting growth. The gloomy business surveys come a little less than three months after the European Central Bank embarked on a 1 trillion-euro stimulus program and will likely fuel expectations its counterpart in Beijing will have to roll out more aggressive policy measures. Euro zone factory growth was weaker than previously thought last month while Chinese factory activity barely accelerated and South Korean exports sank. "Across the euro zone as a whole it is plodding along. We can probably do with a little bit more strength out of Germany and France," said Peter Dixon at Commerzbank. "We are going to have to live with rather slower growth in China. We have seen some modest monetary easing and I expect that will […]

Posted On : Published By : Tom Whipple
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U.S. GDP Swings to Contraction in First Quarter

WASHINGTON—The U.S. economy contracted early this year as harsh weather and a strong dollar sapped demand for American goods, underscoring the choppiness of an expansion that has struggled to lift off. Gross domestic product, the broadest sum of goods and services produced across the economy, shrank at a 0.7% seasonally adjusted annual rate in the first quarter, the Commerce Department said Friday. The agency previously estimated output grew 0.2% from January through March. The revision, near economists’ expectation of a 1% contraction, showed how the world’s largest economy remains vulnerable to shocks as it struggles to regain its vigor. The dip, expected to be short-lived, marked the third quarterly contraction since the economy emerged from recession in mid-2009. “When you’re this weak, little things can knock you off course, whether it’s the Arab spring, the earthquake or ‘Snowmageddon,’ ” economist Dan Greenhaus of brokerage firm BTIG said. “We have […]

Posted On : Published By : Tom Whipple