SMALL BUSINESS OPTIMISM SUSTAINED IN MARCH
The Index of Small Business Optimism fell 0.6 points to 104.7, sustaining the remarkable surge in optimism that started November 9, 2016, the day after the election. Three of the 10 Index components posted a gain, five declined, all by just a few points, and two were unchanged. It is
encouraging that the Index has held at historically high levels for five months. Optimism has not faded much and there is growing evidence that this optimism is being translated into more spending and hiring, although not at explosive rates.
Fact supported (about 25% of NFIB respondents are retailers):
Job openings at small biz best since dot.com years!
Strong job openings leading to increased compensation without commensurate price increases…although the latter is not supported by facts as per the recent acceleration in the CPI, core CPI and PCE deflators.
The NFIB survey is generally a highly coincident indicator, much like consumer sentiment surveys. It also often gets too upbeat although this time is closer to exuberance. Small biz are mainly “pass-through” businesses with high tax rates (Pass-Through Businesses: Data and Policy).
Source: Deutsche Bank, @joshdigga (via The Daily Shot)
U.S. JOLTS: Job Openings Rise, but Hiring Dips
The Bureau of Labor Statistics reported that the total job openings rate of 3.8% during February increased m/m, but remained below July’s peak of 4.0%. The private-sector job openings rate improved to 4.1% versus 4.0% during all of last year. In the government sector, the job openings rate held steady m/m at 2.2%, down from 2.5% three months ago. These figures are from the Job Openings & Labor Turnover Survey (JOLTS). (…)
The actual number of job openings increased 2.1% (3.2% y/y) to 5.743 million, but was lower than the July high of 5.973 million. Private-sector openings improved 2.0% to 5.235 million, up 2.8% y/y. (…)
The total hires rate eased m/m to 3.6% and remained down from the February 2016 high of 3.8%. The private-sector hiring rate dipped to 4.0%, still below the high of 4.2% reached last February. (…)
DeVos Undoes Obama Student Loan Protections
(…) DeVos’s move “will certainly increase the likelihood of default,” said David Bergeron, a senior fellow at the Center for American Progress, a Washington think tank with close ties to Democrats. Bergeron worked under Democratic and Republican administrations over more than 30 years at the Education Department. He retired as the head of postsecondary education.
During Obama’s eight years in office, some 8.7 million Americans defaulted on their student loans, for a rate of one default roughly every 29 seconds. (…)
BoC signals earlier rate hike, upgrades growth forecast
The central bank once again kept its key overnight rate unchanged Wednesday at 0.5 per cent, where it has stood since July 2015.
But the bank acknowledged what most economists have been saying for months – that the Canadian economy is gaining traction, upgrading its forecast for gross domestic product growth this year to 2.6 per cent, from its January estimate of 2.1 per cent.
The bank highlighted the red-hot Toronto area housing market, recent job gains, a resumption of oil patch investment and higher consumer spending from Ottawa’s enhanced child tax benefit. (…)
“Price growth in the [Greater Toronto Area] has accelerated and seems to have entered a phase in which speculation is playing a larger role,” the bank said in its April Monetary Policy report, released Wednesday.
The backdrop to the brighter domestic outlook includes strengthening global growth and expansion in the U.S., which is now close to full employment, the bank said. (…)
“The economic upturn is not yet perceived to be sufficiently certain or sustainable to warrant major investment expenditures,” the bank said in its Monetary Policy Report. “Canadian firms remain wary, in part because of concerns about increased protectionism, reduced competitiveness of Canadian firms in the event of corporate tax cuts and regulatory changes in the United States.”
So while the economy is doing better this year, the bank expects growth to slow significantly in 2018 and 2019. It’s now forecasting GDP growth of 1.9 per cent in 2018, down from a projection of 2.1 per cent, and 1.8 per cent in 2019.
On inflation, the bank said that while the consumer price index is currently at the bank’s two per cent target, key measures of “core” inflation have been “drifting down in recent quarters,” according to the statement.
OPEC Production Keeps Declining as U.S. Shale Surges OPEC said its output kept falling in March as members tightened compliance to agreed cuts, but said U.S. producers were enjoying a revival thanks to higher oil prices.
(…) In its closely watched monthly oil report, OPEC said its production decreased by 153,000 barrels a day to an average of 31.93 million barrels a day. (…) The decrease was largely driven by lower production in the United Arab Emirates and Venezuela, respectively by 33,000 barrels a day and 26,000 barrels a day—which have both committed to reduce their output.
Three OPEC nations exempted from the cuts also suffered production losses. Libyan production fell in March by 61,000 barrels a day after its largest oil field, Sharara, was blocked by guards over wage arrears. Nigeria, which fields are producing less due to maintenance and sabotage, saw its output falling by 30,000 barrels a day while Iran, which is struggling to sell its oil due to U.S. banking sanctions, lost 29,000 barrels a day.
But Saudi Arabia, which has carried the brunt of the effort so far, increased its production by 42,000 barrels a day according to independent experts used by OPEC. However, its output remains below its quota of about 10 million barrels a day.
Saudi Arabia is set to support an extension of the production cuts when OPEC next meets on May 25, people familiar with the matter said this week.
But the group is still pondering how to deal with rising U.S. production, which is filling the vacuum left by its output curbs.
In its monthly report, OPEC raised its U.S. supply growth forecast by 200,000 barrels a day for 2017. (…)
But the OPEC report said Russia only carried cuts of 130,000 barrels a day in March—compared with a pledged 300,000 barrels a day. It also reversed its forecast for annual Russian production to increase by 40,000 barrels a day from a previously expected contraction of 20,000 barrels a day in 2017, following the startup of three new projects.
Do they have any choice? Shale oil cost is declining below $40!
Trump Says Health-Care Revamp Still Priority Ahead of Tax Overhaul President Donald Trump said he would keep pressing to enact a health-care overhaul even if it means delaying another one of his policy goals: revamping the tax code.
(…) “I don’t want to put deadlines,” Mr. Trump said, in a video clip released by Fox Business. “Health care is going to happen at some point. Now, if it doesn’t happen fast enough, I’ll start the taxes.” (…)
And even if they wanted to advance a tax bill now, they don’t have consensus within the White House or among congressional Republicans. They now are aiming for the end of the year.
Mr. Trump suggested that it is important to pass the health-care bill first, because that would provide “hundreds of millions of dollars” in savings that could be used to offset a net tax cut.
He said that “all of that savings goes into the tax.” (…)
In truth, the whole thing looks pretty messy. No sign of consensus on health, no White House tax plan yet, no consensus on tax in Congress.
EARNINGS WATCH
Trucking stocks hit hard on soft hard data
Truckers Warn of Squeezed Profits on Weak Volumes, Oversupply
Swift Transportation Co. SWFT -3.79% and Hub Group Inc. HUBG -14.18% both lowered earnings guidance for the first quarter on Monday, citing weaker-than-anticipated volumes and an oversupply of trucks that pushed down the prices they charge shippers.
Shares of Hub Group, an intermodal provider that arranges transportation for shipping containers by truck and rail, fell 14% Tuesday after the company cut its first-quarter earnings guidance to between 30 cents and 32 cents a share. Analysts had an average forecast of 45 cents before the announcement, according to FactSet.
Swift, which on Monday said it would merge with Knight Transportation Inc., KNX -3.60%revised first-quarter earnings guidance to 9 cents to 10 cents, from 11 cents to 16 cents previously.
“The demand is still soft,” Hub Group Chief Executive David Yeager said Tuesday. “Certainly the stock market has reacted very favorably to President Trump but the economy hasn’t kicked in as we’d like to see it. It’s simple economics, supply and demand—if you have too much supply and less demand, prices are going to decline.”
Swift said first-quarter freight volumes were lower than expected. Even though demand improved in March, it didn’t reach expected levels. (…)
Morgan Stanley CEO Says Repealing Dodd-Frank Is a Mistake
United bumps more passengers than any other large American airline
