Saturday, September 22, 2018
Weekly Commentary:
Q2 2018 Z.1
Flow of Funds
by Doug Noland
full column here:
My summary is below:
The historic federal government
borrowing binge runs unabated.
For the quarter, Federal Expenditures
were up 6.0% y-o-y,
while Federal Receipts were down 2.0%.
Since the end of 2007,
Treasury debt has ballooned
$11.040 TN, or 182%.
borrowing binge runs unabated.
For the quarter, Federal Expenditures
were up 6.0% y-o-y,
while Federal Receipts were down 2.0%.
Since the end of 2007,
Treasury debt has ballooned
$11.040 TN, or 182%.
Total Debt Securities
ended the quarter
at 215% of GDP,
after beginning the nineties near 130%,
ending 1999 at 157%,
and closing out 2007 at 200%.
Total Equities
ended the period
at 237% of GDP,
after ending the eighties at about 70%,
the nineties at 193%
and 2007 at 172%.
Total Debt and Equities
are a record
453% of GDP.
This compares to about 200% to begin the '90s,
350% to end 1999
and 373% to conclude 2007.
ended the quarter
at 215% of GDP,
after beginning the nineties near 130%,
ending 1999 at 157%,
and closing out 2007 at 200%.
Total Equities
ended the period
at 237% of GDP,
after ending the eighties at about 70%,
the nineties at 193%
and 2007 at 172%.
Total Debt and Equities
are a record
453% of GDP.
This compares to about 200% to begin the '90s,
350% to end 1999
and 373% to conclude 2007.
The ratio of
Household
Financial Assets
-to-GDP
ended Q2
at a record 430%.
This compares to 363% in 1999
and 379% in 2007.
Household
Financial Assets
-to-GDP
ended Q2
at a record 430%.
This compares to 363% in 1999
and 379% in 2007.
For the week ending
September 21, 2018:
Stocks:
September 21, 2018:
Stocks:
S&P500 gained 0.8% (up 9.6% y-t-d)
Dow Industrials jumped 2.3% (up 8.2%)
Dow Utilities fell 1.5% (up 0.4%)
Dow Transports slipped 0.3% (up 8.7%)
S&P 400 Midcaps dipped 0.3% (up 7.4%)
Small cap Russell 2000 declined 0.5% (up 11.5%)
Nasdaq100 declined 0.2% (up 17.7%)
Biotechs gained 1.3% (up 23.3%).
With bullion up $6,
the HUI gold stock index rallied 3.9%
(down 25.7%).
US Bonds & Mortgages
Dow Industrials jumped 2.3% (up 8.2%)
Dow Utilities fell 1.5% (up 0.4%)
Dow Transports slipped 0.3% (up 8.7%)
S&P 400 Midcaps dipped 0.3% (up 7.4%)
Small cap Russell 2000 declined 0.5% (up 11.5%)
Nasdaq100 declined 0.2% (up 17.7%)
Biotechs gained 1.3% (up 23.3%).
With bullion up $6,
the HUI gold stock index rallied 3.9%
(down 25.7%).
U.K.'s FTSE surged 2.5% (down 2.6%).
Japan's Nikkei 225 jumped 3.4% (up 4.9% y-t-d).
France's CAC40 rose 2.6% (up 3.4%)
German DAX jumped 2.5% (down 3.8%).
pain's IBEX 35 gained 2.4% (down 4.5%).
Italy's FTSE MIB rallied 3.1% (down 1.4%)
Brazil's Bovespa surged 5.3% (up 4.0%)
Mexico's Bolsa slipped 0.5% (unchanged)
South Korea's Kospi increased 0.9% (down 5.2%)
India's Sensex fell 3.3% (up 8.2%)
China's Shanghai recovered 4.3% (down 15.4%)
Turkey's Borsa Istanbul National 100 index jumped 3.4% (down 15%).
Russia's MICEX equities index rose 2.8% (up 15%).
France's CAC40 rose 2.6% (up 3.4%)
German DAX jumped 2.5% (down 3.8%).
pain's IBEX 35 gained 2.4% (down 4.5%).
Italy's FTSE MIB rallied 3.1% (down 1.4%)
Brazil's Bovespa surged 5.3% (up 4.0%)
Mexico's Bolsa slipped 0.5% (unchanged)
South Korea's Kospi increased 0.9% (down 5.2%)
India's Sensex fell 3.3% (up 8.2%)
China's Shanghai recovered 4.3% (down 15.4%)
Turkey's Borsa Istanbul National 100 index jumped 3.4% (down 15%).
Russia's MICEX equities index rose 2.8% (up 15%).
US Bonds & Mortgages
Ten-year Treasury yields
jumped seven bps to 3.06% (up 66bps).
Long bond yields
rose seven bps to 3.20% (up 46bps).
Benchmark Fannie Mae MBS yields
gained five bps to 3.82% (up 82bps).
jumped seven bps to 3.06% (up 66bps).
Long bond yields
rose seven bps to 3.20% (up 46bps).
Benchmark Fannie Mae MBS yields
gained five bps to 3.82% (up 82bps).
Freddie Mac 30-year fixed mortgage rates
gained five bps to 4.65% (up 66bps y-o-y).
Fifteen-year rates
ose five bps to 4.11% (up 67bps).
Five-year hybrid ARM rates
slipped a basis point to 3.92% (up 45bps).
Jumbo mortgage 30-yr fixed rates
up 17 bps to 4.83% (up 68bps).
gained five bps to 4.65% (up 66bps y-o-y).
Fifteen-year rates
ose five bps to 4.11% (up 67bps).
Five-year hybrid ARM rates
slipped a basis point to 3.92% (up 45bps).
Jumbo mortgage 30-yr fixed rates
up 17 bps to 4.83% (up 68bps).
Federal Reserve Credit
over the past year,
contracted 5.7%.
over the past year,
contracted 5.7%.
M2 money supply gained 3.8%,
over the past year.
over the past year.
Currency Watch:
The U.S. dollar index declined 0.7%
to 94.22 (up 2.3% y-t-d).
to 94.22 (up 2.3% y-t-d).
Commodities Watch:
Goldman Sachs Commodities Index gained 2.0% (up 7.1% y-t-d).
Spot Gold recovered 0.5% to $1,199 (down 8.0%).
Silver rallied 1.5% to $14.359 (down 16.2%).
Crude jumped $1.79 to $70.78 (up 17%).
Gasoline rose 2.4% (up 12%)
Natural Gas surged 7.6% (up 1%).
Copper surged 8.0% (down 13%).
Wheat gained 1.6% (up 22%).
Corn rose 1.6% (2%).
Spot Gold recovered 0.5% to $1,199 (down 8.0%).
Silver rallied 1.5% to $14.359 (down 16.2%).
Crude jumped $1.79 to $70.78 (up 17%).
Gasoline rose 2.4% (up 12%)
Natural Gas surged 7.6% (up 1%).
Copper surged 8.0% (down 13%).
Wheat gained 1.6% (up 22%).
Corn rose 1.6% (2%).
Trump Administration Watch:
September 21 - Bloomberg (Mike Dorning, Jenny Leonard and Mark Niquette):
"U.S. President Donald Trump continued to hit out at China days after announcing another round of tariffs, signaling the trade war won't end any time soon.
'It's time to take a stand on China,' Trump said in an interview…
'We have no choice. It's been a long time. They're hurting us.'"
"U.S. President Donald Trump continued to hit out at China days after announcing another round of tariffs, signaling the trade war won't end any time soon.
'It's time to take a stand on China,' Trump said in an interview…
'We have no choice. It's been a long time. They're hurting us.'"
September 18 - Financial Times (James Politi and Demetri Sevastopulo):
"President Donald Trump's preference for aggressively confronting China on trade had been apparent ever since the collapse of high-level talks between Washington and Beijing in May.
But Monday's decision to impose tariffs on $200bn of Chinese imports brought the hostilities with China to an entirely new level, leaving little room for any settlement. 'It is my duty to protect the interests of working men and women, farmers, ranchers, businesses, and our country…
My administration will not remain idle when those interests are under attack.'"
"President Donald Trump's preference for aggressively confronting China on trade had been apparent ever since the collapse of high-level talks between Washington and Beijing in May.
But Monday's decision to impose tariffs on $200bn of Chinese imports brought the hostilities with China to an entirely new level, leaving little room for any settlement. 'It is my duty to protect the interests of working men and women, farmers, ranchers, businesses, and our country…
My administration will not remain idle when those interests are under attack.'"
September 17 - Bloomberg (Christopher Balding):
"As the trade war between the U.S. and China drags on with new tariffs and no end in sight, we need to ask ourselves: What do they want? A fundamental objective for both is to become less reliant on the other. The trade war should thus be reframed as a conscious uncoupling. Behind the rhetoric from both sides lies a profound distrust. U.S. suspicion stems from two specific issues. China is increasingly seen as a national security threat that fails to play by the rules. The Trump administration's stance has spurred debate over whether it was a mistake to allow admittance of a highly protectionist Communist country to the World Trade Organization… For its part, the government of Xi Jinping is concerned about China's dependence on U.S. technology and finished manufactured products.
The focus of its Made In China 2025 plan is to shift Chinese consumption of high-tech products away from foreign, specifically American, manufacturers and toward domestic companies."
"As the trade war between the U.S. and China drags on with new tariffs and no end in sight, we need to ask ourselves: What do they want? A fundamental objective for both is to become less reliant on the other. The trade war should thus be reframed as a conscious uncoupling. Behind the rhetoric from both sides lies a profound distrust. U.S. suspicion stems from two specific issues. China is increasingly seen as a national security threat that fails to play by the rules. The Trump administration's stance has spurred debate over whether it was a mistake to allow admittance of a highly protectionist Communist country to the World Trade Organization… For its part, the government of Xi Jinping is concerned about China's dependence on U.S. technology and finished manufactured products.
The focus of its Made In China 2025 plan is to shift Chinese consumption of high-tech products away from foreign, specifically American, manufacturers and toward domestic companies."
September 18 - Financial Times (Gideon Rachman):
"They don't call them trade wars for nothing. The latest round of tit-for-tat trade sanctions between the US and China is driven by the same emotions of fear and pride that lead real wars to break out. One country makes an aggressive move, so the other feels obliged to respond in kind. Both sides fear that if they back down, they will lose face in the eyes of the world and of their own people. The Trump administration's view is that China has been 'cheating' on trade for decades. But instead of responding to the first round of US tariffs, imposed in July, with concessions, the Chinese reacted with tariffs of their own. So now
President Donald Trump is imposing further tariffs of 10% on an extra $200bn-worth of Chinese exports. Predictably, rather than backing down, the Chinese have promised to respond to this latest round of measures with more tariffs on American goods. Following the logic of escalation, Mr Trump has pledged that will trigger yet more US tariffs - possibly at a higher rate of 25% - covering essentially all Chinese exports to America. Both sides are willing to risk a trade war because they think they have a good chance of winning."
"They don't call them trade wars for nothing. The latest round of tit-for-tat trade sanctions between the US and China is driven by the same emotions of fear and pride that lead real wars to break out. One country makes an aggressive move, so the other feels obliged to respond in kind. Both sides fear that if they back down, they will lose face in the eyes of the world and of their own people. The Trump administration's view is that China has been 'cheating' on trade for decades. But instead of responding to the first round of US tariffs, imposed in July, with concessions, the Chinese reacted with tariffs of their own. So now
President Donald Trump is imposing further tariffs of 10% on an extra $200bn-worth of Chinese exports. Predictably, rather than backing down, the Chinese have promised to respond to this latest round of measures with more tariffs on American goods. Following the logic of escalation, Mr Trump has pledged that will trigger yet more US tariffs - possibly at a higher rate of 25% - covering essentially all Chinese exports to America. Both sides are willing to risk a trade war because they think they have a good chance of winning."
September 18 - New York Times (Jim Tankersley and Alan Rappeport):
"The Trump administration seems confident that consumers will not feel pain from its escalating trade war with China. 'Because it's spread over thousands and thousands of products, nobody's going to actually notice it at the end of the day,' Commerce Secretary Wilbur Ross told CNBC… But
a pain-free trade war with China is nearly impossible. For American consumers, prices have already risen on some products that the administration targeted for tariffs this year - most notably, washing machines, which were subjected to steep tariffs in January."
"The Trump administration seems confident that consumers will not feel pain from its escalating trade war with China. 'Because it's spread over thousands and thousands of products, nobody's going to actually notice it at the end of the day,' Commerce Secretary Wilbur Ross told CNBC… But
a pain-free trade war with China is nearly impossible. For American consumers, prices have already risen on some products that the administration targeted for tariffs this year - most notably, washing machines, which were subjected to steep tariffs in January."
September 18 - CNBC (Matthew J. Belvedere): "Commerce Secretary Wilbur Ross said… that new U.S. tariffs on China are aimed at modifying Beijing's behavior and leveling the playing field for American companies competing there.
Ross appeared on CNBC the morning after the administration announced that President Donald Trump will impose 10% tariffs on $200 billion worth of Chinese imports, with those duties rising to 25% at the end of the year… Ross said… regarding the expected move, that China is 'out of bullets' to retaliate because its imports to the U.S. are nearly four times larger than the U.S. exports to China."
Ross appeared on CNBC the morning after the administration announced that President Donald Trump will impose 10% tariffs on $200 billion worth of Chinese imports, with those duties rising to 25% at the end of the year… Ross said… regarding the expected move, that China is 'out of bullets' to retaliate because its imports to the U.S. are nearly four times larger than the U.S. exports to China."
September 17 - Reuters (Chris Prentice and David Lawder):
"A top economic adviser to President Donald Trump said… he expects U.S. budget deficits of about 4% to 5% of the country's economic output for the next one to two years,
adding that there would likely be an effort in 2019 to cut spending on entitlement programs. 'We have to be tougher on spending,' White House economic adviser Larry Kudlow said…, adding that government spending was the reason for the wider budget deficits, not the Republican-led tax cuts activated this year."
"A top economic adviser to President Donald Trump said… he expects U.S. budget deficits of about 4% to 5% of the country's economic output for the next one to two years,
adding that there would likely be an effort in 2019 to cut spending on entitlement programs. 'We have to be tougher on spending,' White House economic adviser Larry Kudlow said…, adding that government spending was the reason for the wider budget deficits, not the Republican-led tax cuts activated this year."
Federal Reserve Watch:
September 21 - Reuters (Howard Schneider):
"Unemployment near a 20-year low screams at the U.S. Federal Reserve to raise interest rates or risk a too-hot economy.
The bond market, not far from a state that typically precedes a recession, says not so fast. The decision of which to heed looms large when the Fed's interest-rate setters meet next week. Which path they follow will begin to define whether Chairman Jerome Powell engineers a sustained, recession-free era of full employment, or spoils the party with interest rate increases that prove too much for the economy to swallow. New Fed staff research and Powell's own remarks seem to put more weight on the risks of super-tight labor markets, which could mean a shift up in the Fed's rate outlook and a tougher tone in its rhetoric."
"Unemployment near a 20-year low screams at the U.S. Federal Reserve to raise interest rates or risk a too-hot economy.
The bond market, not far from a state that typically precedes a recession, says not so fast. The decision of which to heed looms large when the Fed's interest-rate setters meet next week. Which path they follow will begin to define whether Chairman Jerome Powell engineers a sustained, recession-free era of full employment, or spoils the party with interest rate increases that prove too much for the economy to swallow. New Fed staff research and Powell's own remarks seem to put more weight on the risks of super-tight labor markets, which could mean a shift up in the Fed's rate outlook and a tougher tone in its rhetoric."
U.S. Bubble Watch:
September 18 - Nextgov (Frank Konkel):
"The federal government is primed to spend as much as $300 billion in the final quarter of fiscal 2018 as agencies rush to obligate money appropriated by Congress before Sept. 30 or return it to the Treasury Department.
The spending spree is the product of the omnibus budget agreement signed six months late in March coupled with funding increases of $80 billion for defense and $63 billion for civilian agencies. The shortened time frame left procurement officials scrambling to find ways to spend the money. Through August, defense and civilian agencies obligated some $300 billion in contracts. But to spend all the money appropriated to them by Congress, they may have to obligate well over $200 billion more in the final quarter of fiscal 2018… 'It is not impossible for this to happen, but
it is unprecedented for that high of a percentage to be obligated to contracts for a fiscal quarter,' David Berteau, president of the Professional Services Council, told Nextgov. 'You'd have to spend almost 50% of the yearly total in three months.'"
"The federal government is primed to spend as much as $300 billion in the final quarter of fiscal 2018 as agencies rush to obligate money appropriated by Congress before Sept. 30 or return it to the Treasury Department.
The spending spree is the product of the omnibus budget agreement signed six months late in March coupled with funding increases of $80 billion for defense and $63 billion for civilian agencies. The shortened time frame left procurement officials scrambling to find ways to spend the money. Through August, defense and civilian agencies obligated some $300 billion in contracts. But to spend all the money appropriated to them by Congress, they may have to obligate well over $200 billion more in the final quarter of fiscal 2018… 'It is not impossible for this to happen, but
it is unprecedented for that high of a percentage to be obligated to contracts for a fiscal quarter,' David Berteau, president of the Professional Services Council, told Nextgov. 'You'd have to spend almost 50% of the yearly total in three months.'"
September 18 - Bloomberg (Shobhana Chandra):
"President Donald Trump's decision to impose tariffs on an additional $200 billion of imports from China drags the biggest part of the U.S. economy into the thick of the trade war, threatening to deliver a more direct hit to growth.
The 10% tariffs… affect everyday items including food, furniture, and clothing, making grocery shopping and holiday gifts potentially pricier. That broadens the trade fallout more directly into the realm of household spending, which accounts for about 70% of the U.S. economy."
"President Donald Trump's decision to impose tariffs on an additional $200 billion of imports from China drags the biggest part of the U.S. economy into the thick of the trade war, threatening to deliver a more direct hit to growth.
The 10% tariffs… affect everyday items including food, furniture, and clothing, making grocery shopping and holiday gifts potentially pricier. That broadens the trade fallout more directly into the realm of household spending, which accounts for about 70% of the U.S. economy."
September 20 - Reuters (Rishika Chatterjee and Nivedita Balu):
"Walmart Inc said that it may hike prices of products if the Trump administration imposes a tariff on Chinese imports, according to a letter the company wrote to U.S. Trade Representative Robert Lighthizer…
Walmart, the world's largest retailer, in its letter said the tariff would impact prices of everything from food products to beverages and personal care items."
"Walmart Inc said that it may hike prices of products if the Trump administration imposes a tariff on Chinese imports, according to a letter the company wrote to U.S. Trade Representative Robert Lighthizer…
Walmart, the world's largest retailer, in its letter said the tariff would impact prices of everything from food products to beverages and personal care items."
September 18 - Wall Street Journal (Te-Ping Chen and Eric Morath):
"U.S. employers are boosting benefits-including bonuses and vacation time-at a faster pace than salaries, a move that gives them more flexibility to dial back that compensation if the economy turns sour.
The cost of benefits for private-sector employers rose 3% in June from a year earlier, while the cost of wages and salaries advanced 2.7%... The benefit gain was driven by a nearly 12% increase in bonuses and other forms of supplemental pay. Paid leave, including vacation time, rose 4% in June from a year earlier… 'Bonuses and supplemental pay speak to labor market conditions, and workers are in a good spot to get a little more,' said Ryan Sutton, a district president for staffing agency Robert Half. '
Companies are still reluctant to move base wages up too much. It's a lot harder to take that away than bonuses.'"
"U.S. employers are boosting benefits-including bonuses and vacation time-at a faster pace than salaries, a move that gives them more flexibility to dial back that compensation if the economy turns sour.
The cost of benefits for private-sector employers rose 3% in June from a year earlier, while the cost of wages and salaries advanced 2.7%... The benefit gain was driven by a nearly 12% increase in bonuses and other forms of supplemental pay. Paid leave, including vacation time, rose 4% in June from a year earlier… 'Bonuses and supplemental pay speak to labor market conditions, and workers are in a good spot to get a little more,' said Ryan Sutton, a district president for staffing agency Robert Half. '
Companies are still reluctant to move base wages up too much. It's a lot harder to take that away than bonuses.'"
September 18 - CNBC (Thomas Franck):
"Former White House economic advisor Gary Cohn said President Donald Trump will work with Congress to pass a massive debt-fueled infrastructure bill if Democrats take control of the House of Representatives in November.
'If the Democrats win the House I will be shocked if the first thing they don't do is infrastructure,' Cohn said… 'I think they'll do a trillion dollars, trillion and a half dollars of infrastructure, and the president will sign it.' 'Another trillion dollars of debt, here we come,' he added.
A perennial issue for Washington lawmakers, the national debt is expected to rise to $28.7 trillion from $15.7 trillion over the next decade, according to the Congressional Budget Office."
"Former White House economic advisor Gary Cohn said President Donald Trump will work with Congress to pass a massive debt-fueled infrastructure bill if Democrats take control of the House of Representatives in November.
'If the Democrats win the House I will be shocked if the first thing they don't do is infrastructure,' Cohn said… 'I think they'll do a trillion dollars, trillion and a half dollars of infrastructure, and the president will sign it.' 'Another trillion dollars of debt, here we come,' he added.
A perennial issue for Washington lawmakers, the national debt is expected to rise to $28.7 trillion from $15.7 trillion over the next decade, according to the Congressional Budget Office."
September 19 - Bloomberg (Riley Griffin):
"As U.S. household debt rises and wages stagnate, millions of Americans are thinking about tapping into home equity to keep up with day-to-day expenses.
Twenty-four million homeowners believe borrowing against home equity is an acceptable way to cover regular bills, according to a Bankrate.com report… Cash-strapped millennials, low earners and the less educated were most likely to think home equity offered an appropriate solution to ordinary bills. 'Regular household bills should be funded by a regular household income, not home equity,' said Greg McBride, chief financial analyst at Bankrate.com. 'Wage growth has been elusive, but rising household expenses have not. And now home equity is being seen as a lifeline for those who are strapped for money with little wiggle room.'"
"As U.S. household debt rises and wages stagnate, millions of Americans are thinking about tapping into home equity to keep up with day-to-day expenses.
Twenty-four million homeowners believe borrowing against home equity is an acceptable way to cover regular bills, according to a Bankrate.com report… Cash-strapped millennials, low earners and the less educated were most likely to think home equity offered an appropriate solution to ordinary bills. 'Regular household bills should be funded by a regular household income, not home equity,' said Greg McBride, chief financial analyst at Bankrate.com. 'Wage growth has been elusive, but rising household expenses have not. And now home equity is being seen as a lifeline for those who are strapped for money with little wiggle room.'"
September 17 - Reuters (Laila Kearney):
"While U.S. states' financial health has strengthened in 2018 compared with last year, fewer than half have enough financial reserves to weather the first year of a moderate recession, according to an S&P Global Ratings report…
Only 20 states have the reserves needed to operate for the first year of an economic downturn without having to slash budgets or raise taxes, S&P said. 'In their fight against recessions, budget reserves are what states send to the frontline,' the report said. 'They are an internal source of immediate liquidity and can provide transitional funding to agencies before budget cuts take effect.' States face worse revenue shortfalls in the next recession compared with the Great Recession, S&P said. That is because states rely more heavily on personal income taxes as a percentage of general fund revenues now than a decade ago, with the taxes currently contributing a combined 55% to the funds compared with 49% in 2008, S&P said."
"While U.S. states' financial health has strengthened in 2018 compared with last year, fewer than half have enough financial reserves to weather the first year of a moderate recession, according to an S&P Global Ratings report…
Only 20 states have the reserves needed to operate for the first year of an economic downturn without having to slash budgets or raise taxes, S&P said. 'In their fight against recessions, budget reserves are what states send to the frontline,' the report said. 'They are an internal source of immediate liquidity and can provide transitional funding to agencies before budget cuts take effect.' States face worse revenue shortfalls in the next recession compared with the Great Recession, S&P said. That is because states rely more heavily on personal income taxes as a percentage of general fund revenues now than a decade ago, with the taxes currently contributing a combined 55% to the funds compared with 49% in 2008, S&P said."
September 20 - Financial Times (Diana Olick):
"After three years of soaring home prices, the heat is coming off the U.S. housing market. Home sellers are slashing prices at the highest rate in at least eight years, especially in the West, where the price gains were hottest.
In the four weeks ended Sept. 16, more than one-quarter of the homes listed for sale had a price drop, according to Redfin, a real estate brokerage. That is the highest level since the company began tracking the metric in 2010. Redfin defines a price drop as a reduction in the list price of more than 1% and less than 50%."
"After three years of soaring home prices, the heat is coming off the U.S. housing market. Home sellers are slashing prices at the highest rate in at least eight years, especially in the West, where the price gains were hottest.
In the four weeks ended Sept. 16, more than one-quarter of the homes listed for sale had a price drop, according to Redfin, a real estate brokerage. That is the highest level since the company began tracking the metric in 2010. Redfin defines a price drop as a reduction in the list price of more than 1% and less than 50%."
September 17 - Wall Street Journal (Paul J. Davies):
"People in the Carolinas are about to rediscover the difference between the damage a storm causes and what is covered by insurance.
Hurricane Florence weakened considerably as it moved over the U.S. coast over the weekend, lessening its speed and causing much less wind damage than had been feared earlier last week. However, heavy rain and severe flooding have arrived, bringing tragedy in their wake. The problem is that while wind damage is well covered by insurers and reinsurers, flood damage is absent from most homeowner policies and is typically an optional cover in commercial policies."
"People in the Carolinas are about to rediscover the difference between the damage a storm causes and what is covered by insurance.
Hurricane Florence weakened considerably as it moved over the U.S. coast over the weekend, lessening its speed and causing much less wind damage than had been feared earlier last week. However, heavy rain and severe flooding have arrived, bringing tragedy in their wake. The problem is that while wind damage is well covered by insurers and reinsurers, flood damage is absent from most homeowner policies and is typically an optional cover in commercial policies."
China Watch:
September 18 - CNBC (Tae Kim):
"China said it will institute new tariffs on U.S. goods worth $60 billion on Sept. 24, according to a Reuters report. The media outlet said the Asian country's tariff rate on a list of 5,207 U.S. products will range between 5% and 10%."
"China said it will institute new tariffs on U.S. goods worth $60 billion on Sept. 24, according to a Reuters report. The media outlet said the Asian country's tariff rate on a list of 5,207 U.S. products will range between 5% and 10%."
September 18 - Reuters (Jamie McGeever):
"One of the foundations upon which the economic and financial relationship between the United States and China over the past 15 years has been built is the assumption that Beijing won't sell its vast holdings of U.S. Treasuries.
The financial damage to both countries, and the potential fallout beyond the monetary effect, would be so profound that it simply wouldn't happen, so the theory goes. Disregarding this would be the economic superpower equivalent of the Cold War's 'mutually assured destruction' doctrine. But with trade tensions between the two countries escalating dramatically, it may no longer be a total long shot. It's a scenario being contemplated now more than at any point in recent years…"
"One of the foundations upon which the economic and financial relationship between the United States and China over the past 15 years has been built is the assumption that Beijing won't sell its vast holdings of U.S. Treasuries.
The financial damage to both countries, and the potential fallout beyond the monetary effect, would be so profound that it simply wouldn't happen, so the theory goes. Disregarding this would be the economic superpower equivalent of the Cold War's 'mutually assured destruction' doctrine. But with trade tensions between the two countries escalating dramatically, it may no longer be a total long shot. It's a scenario being contemplated now more than at any point in recent years…"
Emerging Markets Watch:
September 19 - Reuters (Walter Bianchi and Scott Squires):
"Argentina's gross domestic product contracted 4.2% in the second quarter of 2018 from the same period last year and 3.9% from the prior quarter…
Sky-high interest rates have shut off growth in the recession-hit country while failing to bolster its beleaguered peso currency, which has slumped more than 52% against the dollar so far this year."
"Argentina's gross domestic product contracted 4.2% in the second quarter of 2018 from the same period last year and 3.9% from the prior quarter…
Sky-high interest rates have shut off growth in the recession-hit country while failing to bolster its beleaguered peso currency, which has slumped more than 52% against the dollar so far this year."
September 20 - Bloomberg (Aashika Suresh):
"It's little wonder that debt defaults by key Indian shadow bank Infrastructure Leasing & Financial Services Ltd. have shocked credit traders: not only are nonpayments rare in the country, but the conglomerate is a major player in the market.
IL&FS's outstanding debentures and commercial paper accounted for 1% and 2%, respectively, of India's domestic corporate debt market as of March 31, according to Moody's… The liquidity problems at IL&FS are raising concern about broader fallout among Indian lenders, already struggling to clean up more than $210 billion of stressed debt on their balance sheets. And the group's complex corporate structure makes problems worse -- it has 169 subsidiaries, associates and joint ventures."
"It's little wonder that debt defaults by key Indian shadow bank Infrastructure Leasing & Financial Services Ltd. have shocked credit traders: not only are nonpayments rare in the country, but the conglomerate is a major player in the market.
IL&FS's outstanding debentures and commercial paper accounted for 1% and 2%, respectively, of India's domestic corporate debt market as of March 31, according to Moody's… The liquidity problems at IL&FS are raising concern about broader fallout among Indian lenders, already struggling to clean up more than $210 billion of stressed debt on their balance sheets. And the group's complex corporate structure makes problems worse -- it has 169 subsidiaries, associates and joint ventures."
Europe Watch:
September 21 - Financial Times (Laura Hughes and George Parker):
"A defiant Theresa May on Friday accused EU leaders of failing to show "respect" to Britain and threw down the gauntlet to Brussels to shift its position or risk a breakdown in Brexit negotiations and a no deal exit.
In a statement delivered in Downing Street in front of two union flags, Mrs May said Britain stood ready to leave the EU without a deal and admitted Brexit negotiations had run into the sand. 'We are at an impasse… It is not acceptable to simply reject the other side's proposals without a detailed explanation and counter-proposals. I will not overturn the result of the referendum nor will I break up my country.'"
"A defiant Theresa May on Friday accused EU leaders of failing to show "respect" to Britain and threw down the gauntlet to Brussels to shift its position or risk a breakdown in Brexit negotiations and a no deal exit.
In a statement delivered in Downing Street in front of two union flags, Mrs May said Britain stood ready to leave the EU without a deal and admitted Brexit negotiations had run into the sand. 'We are at an impasse… It is not acceptable to simply reject the other side's proposals without a detailed explanation and counter-proposals. I will not overturn the result of the referendum nor will I break up my country.'"
Global Bubble Watch:
September 20 - Bloomberg (William Horobin):
"The global economy is shrouded in 'high uncertainty' as the outlook for emerging markets deteriorates sharply and trade tensions intensify, the Organization for Economic Cooperation and Development said. The gloomy analysis has pushed the Paris-based institution to cut its global growth forecasts for this year and next with particularly sharp revisions for Turkey, Argentina, South Africa and Brazil. Since its last economic forecasts in May, the OECD said differences between economies have widened, confidence has fallen, and business surveys across the world point to a slowdown.
'Global growth is hitting a plateau,' its chief economist, Laurence Boone, said…"
"The global economy is shrouded in 'high uncertainty' as the outlook for emerging markets deteriorates sharply and trade tensions intensify, the Organization for Economic Cooperation and Development said. The gloomy analysis has pushed the Paris-based institution to cut its global growth forecasts for this year and next with particularly sharp revisions for Turkey, Argentina, South Africa and Brazil. Since its last economic forecasts in May, the OECD said differences between economies have widened, confidence has fallen, and business surveys across the world point to a slowdown.
'Global growth is hitting a plateau,' its chief economist, Laurence Boone, said…"
September 17 - Bloomberg (Jeanna Smialek, Shobhana Chandra and Enda Curran): "Workers in the world's richest countries are getting their biggest pay bump in a decade, a step toward solving a labor market puzzle that's unnerving central bankers.
As shrinking unemployment in the U.S., Japan and euro zone finally forces companies to lift wages to retain and attract staff, JPMorgan... reckons pay growth in advanced economies hit 2.5% in the second quarter, the most since the eve of 2009's worldwide recession. The bank predicts wages will accelerate to near 3% next year."
As shrinking unemployment in the U.S., Japan and euro zone finally forces companies to lift wages to retain and attract staff, JPMorgan... reckons pay growth in advanced economies hit 2.5% in the second quarter, the most since the eve of 2009's worldwide recession. The bank predicts wages will accelerate to near 3% next year."
Fixed Income Bubble Watch:
September 18 - Wall Street Journal (Sam Goldfarb and Soma Biswas):
"One of the largest-ever sales of speculative-grade debt was completed with ease on Tuesday, a sign of the favorable environment for U.S. borrowers at a time of robust economic growth and strong demand from investors. The $13.5 billion sale-which a Blackstone Group LP-led investor group is using to acquire a 55% stake in a Thomson Reuters Corp. data business called Refinitiv-comprised $9.25 billion of loans and $4.25 billion of secured and unsecured bonds, with different pieces denominated in U.S. dollars and euros."
"One of the largest-ever sales of speculative-grade debt was completed with ease on Tuesday, a sign of the favorable environment for U.S. borrowers at a time of robust economic growth and strong demand from investors. The $13.5 billion sale-which a Blackstone Group LP-led investor group is using to acquire a 55% stake in a Thomson Reuters Corp. data business called Refinitiv-comprised $9.25 billion of loans and $4.25 billion of secured and unsecured bonds, with different pieces denominated in U.S. dollars and euros."
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