The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for September, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $459.8 billion, an increase of 0.6 percent (±0.5%) from the previous month, and 2.7 percent (±0.9%) above September 2015. Total sales for the July 2016 through September 2016 period were up 2.4 percent (±0.5%) from the same period a year ago. The July 2016 to August 2016 percent change was revised from down 0.3 percent (±0.5%)* to down 0.2 percent (±0.2%)*.
(…) the European Union’s statistics agency on Friday said that on a seasonally adjusted basis, exports of goods from the currency area rose by 2.3% from July, more than reversing a fall in that month, while imports rose by 0.9%, leading to an increase in the trade surplus to €23.3 billion ($25.7 billion) from €20.8 billion in July. Without the seasonal adjustment, the surplus widened to €18.4 billion from €11.2 billion a year earlier. (…)
Here’s the reality (Eurostat charts):
U.S. trade flows are not buoyant either. RBC Capital links this to the inventory drawdown which could be near its end.
Let’s hope so. Global manufacturing sure needs a good Christmas season>
Chinafactory gate prices rose 0.1% YoY (analysts had forecast a 0.3% decline). China’s headline consumer inflation also rose for the first time in four months to a three-month high of 1.9% last month from August’s 1.3%. Non-food consumer prices climbed 1.6% and food prices increased 3.2%
Commodity prices have been rising lately while last year’s sharp energy price falls fade out of inflation baskets.
(…) But low interest rates are a double-edged sword. While keeping borrowing costs down, they also increase pension obligations for companies offering defined benefit plans to employees. According to complicated actuarial math, the present day value of future pension liabilities increases as rates fall.
Consequently, S&P 1500 companies have struggled with obligations that have surged 36% this year alone, as of Sept. 30, totalling a combined $551 billion, according to Mercer. The deficit was $404 billion at the end of last year.
Meanwhile the cost of simply holding pensions on company books has increased in recent years. Congress has boosted the amount in premiums pension sponsors must pay to the Pension Benefit Guaranty Corp., the nation’s pension insurer. Businesses with underfunded plans, meaning the value of their assets don’t equal the liabilities, must pay added variable rate premiums that further increase the cost of their pensions.
Goldman’s analysis uses the hypothetical example of a company with earnings per share of $0.70. After borrowing $2 billion at a 5% rate and contributing the money to its pension, assuming a 6.5% return on its assets, the company would boost earnings per share by $0.0448 cents, compared to a $0.0337 boost through buybacks. The earnings boost includes assumptions for the tax deductibility of debt and the savings made by cutting the premiums paid to the PBGC. The report outlines the full analysis.
“We’re surprised we haven’t seen more of it,” said Michael Moran, pension strategist at Goldman Sachs Asset Management.
Taking more debt to pay down debt…
(…) A fast-growing app called Stash is trying to make money by making investing enjoyable again. Its co-founders, Brandon Krieg and Ed Robinson, say they can do that without inspiring their customers, most of them millennials, to do anything too stupid. (…)
The average Stash user earns $45,000 a year. Common employers include Wal-Mart, Uber, the U.S. Postal Service, and, especially the U.S. military, with service members making up one in eight users. (…)