EMERGING SUBMERGING
We know something will eventually pop up from this:
Fed on Track to Raise Rates Regardless of Emerging-Market Woes EMs struggling with higher U.S. rates are likely to get little Fed sympathy.
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El-Erian Warns Brazil May Be Next Emerging-Market Domino to Fall
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The ECB’s QE Debate Shows It Won’t Flinch Over Italy
EARNINGS, INFLATION WATCH
We know something will eventually pop up from this:
(…) Delta, the nation’s No. 2 carrier, said Wednesday it could take six to 12 months to recoup the extra fuel costs via pricier tickets. (…) Average domestic airline fares have fallen in each of the past four years, according to trade group Airlines for America, as carriers handed most of the fall in fuel prices back to passengers. (…)
“We feel good about our ability to pass through the increase in fuel price,” United Continental Holdings Inc. President Scott Kirby said at an investor event last month. He said strong summer demand is bolstering industry pricing power—with carriers pushing through a succession of small increases of between $2 and $5 per flight on domestic routes—and that will help United recoup about 75% of the higher fuel prices. (…)
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Good Morning! Your Starbucks Coffee Just Got More Expensive The chain has raised prices between 10 cents and 20 cents on all sizes of brewed coffee in most of the more than 8,000 company-operated stores across the U.S.
(…) In the first half of this fiscal year, Starbucks store operating expenses rose 9% compared with the same period a year earlier, while its cost of sales including expenses such as rent rose 13%.
Including this latest increase, Starbucks has raised prices by 1% to 2% in the past year, putting it on par with the industry and inflation on prices for dining out, the spokeswoman said. (…)
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Trump’s Steel Tariffs Could Mess With Texas Damage to U.S. industry from higher metal prices will be widespread. One of the biggest losers could be the industry best poised to reduce the U.S. trade deficit itself: oil and gas.
(…) Oil drilling is inherently steel-intensive. Steel typically contributes up to 10% to 20% of the cost of drilling and completing an oil well, according to the Texas Alliance of Energy Producers. In turn, up to half of the specialized pipe and tubular steel products that the industry relies on are imported, according to the Independent Petroleum Association of America—meaning energy companies will need to suck up nearly the entire 25% price increase, absent any tariff exemptions. U.S. steel prices, already among the highest of major economies, have risen by 20% since late February, when news of the planned tariffs first broke. (…)
For pipelines, the situation is even worse—a 2017 study by consultancy ICF found that 77% of the steel used in line pipe was imported at an approximate cost of $2.2 billion in both 2015 and 2016, implying additional annual construction costs of about $550 million if the top line 25% tariff rate stays. (…)
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U.S. Productivity Rose Less Than Expected in First Quarter U.S. worker productivity rose more slowly than originally estimated in the first three months of 2018, a potential headwind to stronger economic growth going forward.
The productivity of nonfarm workers, measured as the output of goods and services for each hour on the job, increased at a 0.4% seasonally adjusted annual rate in the first quarter, the Labor Department said Wednesday. (…)
A gauge of compensation costs, unit labor costs, increased at a 2.9% annual rate in the first three months of the year, compared with an initial estimate of 2.7%. (…)
From a year earlier, worker productivity advanced 1.3%. That is consistent with the sluggish 1.2% average annual rate recorded from 2007 to 2017, and well below the better than 2% annual average recorded since the end of World War II. (…)
Wednesday’s report said productivity dropped sharply in the manufacturing sector in the first quarter, falling 1.2% from an earlier estimate of 0.5% growth. (…)
From a year earlier, unit labor costs increased 1.3%. (…)
