U.S. Business Confidence Shaken by Political and Climate Instability
The Business Confidence Index fell sharply from 56.7 to 54.2 in September reflecting both the uncertainty caused by unusually violent weather experienced in the Caribbean and Southern U.S. states, and continuing political problems in The Americas, Asia, Europe and the Middle East.
Economic growth as reflected by the Market Growth and Sales Indexes remained high, Staffing levels increased satisfactorily and Price Inflation remained under control, but overall the September results from the Sales Managers Indexes suggested a general air of uncertainty, which caused the headline Index to fall to a lower level than recent months.
Sales Managers’ Index (SMI) Sales Growth Index
Prices Charged Index Staffing Levels Index
U.S. Home Builder Index Declines
COMMERCIAL CONSTRUCTION INDEX
The USG Corporation + U.S. Chamber of Commerce Commercial Construction Index (CCI) is a quarterly economic index designed to gauge the outlook for and resulting confidence in the commercial construction industry. Recognizing
In Q3 2017, more than three quarters of contractors report steady or increasing backlogs. Large companies continue to see backlog increases, but smaller companies appear to see a slight shift downward in the current quarter compared with Q2 2017.
Employment in construction has risen 25% since 2012 compared with +10% for total employment.
Unfinished Business: Why Oil Output May Surprise There are signs that the surge in drilling by shale-oil producers has ended, reducing estimates of U.S. oil output and pushing up prices.
(…) The U.S. Energy Information Administration last week cut estimated U.S. crude-oil production by 1.3% and 1.4% for the third and fourth quarters of 2017 compared with August estimates, respectively. (…)
But the crucial step between drilling wells and producing oil—completion—has lagged behind. That means that the backlog of drilled but uncompleted wells, or DUCs, has risen and oil production may be lower than expected in the coming months. In the prolific Permian Basin alone, the number of DUCs was 2,330 in July,according to the EIA—an all-time-high and an increase of 94% compared with a year earlier. Since that figure is now nearly two months old, the number might have continued moving higher even as the rig count declined. (…)
Yet the buildup of DUCs is also bearish since it creates latent supply. Because the incremental cash cost to start pumping crude is low for a DUC, the payback period for an oil company is only a year or so. Even for wells not drilled, analysts at Citigroup estimate the break-even cost to drill and complete a well is just $29 a barrel on a production-weighted basis for the drillers they cover once the costs of acreage and sunk capital costs are excluded for the companies they cover. (…)
Tax Cuts on the Horizon for Canada’s New Fiscal Champion
Tax cuts for workers and businesses are looming in Quebec as the provincial government prepares to use its fiscal cushion to give voters relief ahead of planned elections in less than 13 months.
A booming economy and a vibrant job market are putting Canada’s second-most populous province on track to post a third-consecutive year of budget surpluses. Premier Philippe Couillard indicated he’s ready to turn on the stimulus taps further to lower a level of taxation he sees as a hurdle to economic growth and investment. (…)
‘Buyback trade’ fizzles as stock repurchases slow
(…) Companies in the S&P 500 bought back about $120bn of their own stock in the second quarter, a 9.8 per cent decrease from the first quarter of the year, and a 5.8 per cent decline from the same period in 2016, according to S&P Dow Jones Indices numbers released on Monday.
For the 12 months ending June 2017, S&P 500 companies spent just over $500bn on buybacks, according to S&P Dow Jones, down 14.5 per cent from the preceding 12 months. (…)
BITCOIN
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Central banks should consider introducing their own cryptocurrencies to counter the risks from the explosive growth in bitcoin and other virtual currencies, the Bank for International Settlements said in a new report.
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Behind every bubble is a good idea bursting to get out, and bitcoin kind of looks like a good idea, at least if you squint a bit, writes James Mackintosh.
