Import Prices Fell Slightly, Helped by Strong Dollar
Import prices excluding volatile fuel items fell 0.3% in July after posting a similar drop in June, the Labor Department said Tuesday, reversing five straight months of increases earlier this year. The price declines came after the dollar rallied as much as 7% between mid-February and late May against a basket of currencies, bolstering Americans’ purchasing power relative to the rest of the world. (…)
Because the Labor Department data don’t include taxes, it is unclear what effect the tariffs that Washington has slapped on imported goods from China and other countries in recent months are having on final consumer prices. (…)
Small Business Optimism Index Nears Survey High in July
This is the best of times:
Great sales :
Amazing earnings!
Imagine if they could find the needed labor:
Comp keeps rising faster than prices but strong sales more than offsetting:
Good time to expand…although something is bothering some…
…so better keep some dry powder:
As The Daily Shot explains:
(…) it’s important to note that 60% of the NFIB members are businesses with 1-5 employees (pie chart below). The report, therefore, has some similarities to consumer sentiment indicators.
Household Borrowing Reaches Record $13.3 Trillion Borrowing has continued at a brisk pace for auto loans and mortgages, as delinquencies remain low
Debts rose by $82 billion in the second quarter, driven by rising mortgage, credit-card and auto-loan balances, according to the Federal Reserve Bank of New York’s quarterly report on household debt and credit.
Total debt is now higher than before the financial crisis, when widespread defaults, especially on mortgages, contributed to the longest and deepest recession since the Great Depression. After paying down debt through 2013, in aggregate, consumers gradually began to borrow again, and household debt is now nearly 20% higher than five years ago. (…)
In the second quarter, lenders originated $151 billion of new auto loans, the best quarter in 13 years. The total stock of outstanding auto loans climbed to a record $1.24 trillion. In a sign that the lending could continue without causing widespread distress, loans have been rising for borrowers with the highest credit scores and declining for those with lower scores. (…)
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Overhaul Boosts Credit Scores of Millions of U.S. Consumers Those with at least one collections account removed from their credit reports experienced an 11-point increase, on average
The credit scores of millions of U.S. consumers have risen following a broad overhaul of how credit-reporting firms handle negative credit information.
Consumers who had at least one collections account removed from their files experienced an 11-point increase, on average, in their credit scores, according to a report released Tuesday by the New York Federal Reserve. The report was based on a sample of millions of anonymous credit reports from credit-reporting firm Equifax Inc. EFX 0.53% Collections were completely removed from 8 million consumers’ credit reports in the 12 months through June, resulting in an average 14-point increase.
The improvements come after the three largest U.S. credit-reporting firms changed how they deal with certain kinds of negative credit events that some have said are prone to error and unfairly drag down credit scores. The firms—Equifax, Experian EXPGY -0.02%PLC and TransUnion—agreed to revamp the reports following settlements with state attorneys general dating back to 2015.
The settlements prompted the credit-reporting firms to remove some non-loan related items that were sent to collections firms, such as gym memberships, library fines and traffic tickets. The firms also agreed to remove medical-debt collections that have been paid by a patient’s insurance company. (…)
For 20% of consumers who previously had a score below 620, the changes pushed their credit scores above that level—an increase that can mean the difference between getting approved or denied for a loan.
EMU Growth: Is it on Shakier Ground?
EMU industrial production fell 0.7% in June with the year-on-year pace at 2.3%. But in the QTD (quarter-to-date, which now refers to the full second quarter), output is falling at an annual rate of 0.6%, led by weakness in the output of consumer durables. (…)
Despite what are relatively healthy year-over-year metrics for EMU IP, the shorter term results are sputtering and there are all sorts of reasons to not dismiss this unevenness.
The trade war, Brexit, recent geopolitical turmoil centered on Turkey and a planned ECB exit from its program of super stimulus, all raise warning flags on the outlook and create opportunities for ‘something’ to go wrong. (…)
The new jolt to global growth prospects from troubles in Turkey has spread and has prompted investors to consider that the Goldilocks environment may be in its final daze. Argentina and Venezuela are in the news, not because of any link to Turkey but because it’s time to begin to look for trouble spots and so we are beginning to look at the lumps in the carpet instead of ignoring what we previously swept under it. (…)
Turkey or trade could be the catalyst to bring out more problems. There is just no telling what might unravel next. India, a country that seemed to be doing well, may now be drawn into a destabilizing vortex of interest rate hikes. China, the truly big – or huge- enchilada, is showing signs of slowing but is not yet any kind of threat to growth. But China has its own festering issues. Policies launched by Donald Trump are shaking the global mercantilist tree. And what falls from it may be more than too-ripe fruit.
TURKEY
Turkey to Raise Tariffs on U.S. Products
Turkey Shifts Toward Russia as Sanctions Sour U.S. Relations
Turkey is the epicenter of the EM debt crisis developing. About 2/3 of the global debt increase since 2009 was in EMs. Rising interest rates, a strong USD, tariffs, the case has been slowly building for a “face the reality show” and Turkey is the first to bite the bullet. Turkey is small (17th largest economy in world), but not that small. It’s bigger than Thailand (30th then) which launched the 1997 crisis and it’s bigger than Greece (33rd).
Contagion prone: Brazil, Argentina, Mexico, Indonesia, Russia and South Africa.
This time around, most of the EM ex-China debt is held by the private sector, i.e. banks and funds. Nearly 40% of Turkey’s debt comes due in the next 12 months and its foreign reserves are some 20% of its external debt. Thailand redux.
Small Turkey? Fifth largest in Europe!
Hmmm…
Investors Hide in U.S. as Washington Stirs Markets Abroad U.S. foreign-policy moves have been driving sharp swings in overseas markets. But there are questions about how long U.S. markets can continue to outpace the rest of the world.
The White House’s recent actions on trade and international sanctions have amplified steep declines across markets in Turkey, Russia and China at a time emerging economies were already grappling with a stronger dollar and decelerating global growth.
U.S. stocks have beaten foreign stocks in part as investors seek a more stable market during the rocky period, analysts say. Strong U.S. economic and earnings growth has helped. While the S&P 500 has risen 4.5% this quarter and is trading within roughly 1% of its all time high, the MSCI AC World ex-USA Index has fallen 1.3% this quarter and is down nearly 7% for the year so far. (…)
Fund investors have pushed their allocations of U.S. stocks and bonds near postelection highs, according to data from the Institute of International Finance.
The U.S. has also regained its crown as the most favored region for stocks for the first time in five years, according to fund managers surveyed by Bank of America Merrill Lynch. (…)
The ICE Dollar Index has risen to its highest in about a year, climbing roughly 2% this quarter and 5% this year as the Federal Reserve continues to raise interest rates. (…)