Economic Indicators – Japan Exports Fall Most Since 2009 As Pandemic Wipes Out Global Demand

Japan’s exports fell the most since the 2009 global financial crisis in April as the coronavirus pandemic slammed world demand for cars, industrial materials and other goods, likely pushing the world’s third-largest economy deeper into recession.

The ugly trade numbers come as policymakers seek to balance virus containment measures against the need to revive battered parts of the economy, with the risk of a second wave of infections only complicating this challenge.


The central bank will hold an emergency meeting on Friday to work out a scheme that would encourage financial institutions to lend to smaller, struggling firms. Policymakers are also considering cash injections for companies of all sizes.

Ministry of Finance (MOF) data on Thursday showed Japan’s exports fell 21.9% in April year-on-year as U.S.-bound shipments slumped 37.8%, the fastest decline since 2009, with car exports there plunging 65.8%.

The fall was the biggest since October 2009 during the global financial crisis, but slightly less than a 22.7% decrease seen by economists in a Reuters poll. Exports fell 11.7% in March.

“Reopening of trade with China led China-bound exports of electronics parts and imports of masks and PC, but trade with Europe, America and Southeast Asia remain shrunk,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

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“It’s still far from fully-fledged resumption of economic activity. As exports and imports remain stagnant for a prolonged period of time, global trade will remain contractionary for the time being.”

Exports to China, Japan’s largest trading partner, fell 4.1% in the year to April, due to slumping demand for chemical materials, car parts and medicines.

Shipments to Asia, which account for more than half of Japanese exports, declined 11.4%, and exports to the European Union fell 28.0%.

Other trade-reliant economies in Asia have also been hit with data on Thursday showing South Korea’s exports slumping by a fifth in the first 20 days of May, year-on-year.

Industry data released last week showed Japan’s machine tool orders in April fell to their lowest level in more than a decade, a sign of deteriorating business spending.

Japan’s economy slipped into recession for the first time in 4-1/2 years, putting the nation on course for its deepest postwar slump as the pandemic ravages businesses and consumers.

Monday’s first-quarter GDP data underlined the broadening impact of the outbreak, with first quarter exports plunging the most since the devastating March 2011 earthquake and tsunami.

A private sector manufacturing survey showed on Thursday the decline in Japan’s factory activity accelerated in May as output and orders slumped.

Analysts warn of an even bleaker picture for the current quarter as consumption crumbled after the government in April requested citizens to stay home and businesses to close.


COVID-19 to Cause 17% Unemployment in June

U.S. unemployment is expected to hit 17% in June as the economy contracts due to efforts to contain the coronavirus pandemic, economists predicted, and the economy is expected to start rebounding in the second half of the year.

A monthly Wall Street Journal survey found economists expect gross domestic product to shrink 6.6% this year, measured from the fourth quarter of 2019, a downgrade from the 4.9% contraction economists predicted in last month’s survey. While economists expect a deeper contraction in the second quarter, a majority—85%—continue to expect the recovery will start in the second half of the year. They predict an annualized growth rate of 9% in the third quarter, up from 6.2% in the prior survey. Growth is expected to clock in at 6.9% in the fourth quarter, up slightly from last month.

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“The trough will occur in May or June, with activity starting to pick up,” said Chad Moutray, chief economist for the National Association of Manufacturers. “With that said, growth will remain well below pre-recessionary levels likely until at least 2022.”

Business and academic economists in this month’s survey expect, on average, that gross domestic product will contract at an annual rate of 32% in the second quarter. That represents a worsening from the April survey of economists, when they expected GDP to shrink 25% from April to June. The annualized rate, however, overstates the severity of any drop in output because it assumes that one quarter’s pace continues for a year.

In the May survey, 68.3% of economists said they expect the recovery to be shaped like a “swoosh.” Named after the Nike logo, it predicts a large drop followed by a gradual recovery. The survey results echo recent comments by corporate executives.

As states start to loosen stay-at-home orders, economists were split on whether this is the right moment to do so. Some 29.8% said the reopening measures are happening at the right time. 14% said such measures were overdue, while 31.6% described it as too soon. Just under a quarter, 24.6%, were unsure whether the timing is right.

“In the absence of a vaccine or some therapeutic drug, opening the economy now would certainly trigger a spike in new infections and will be followed by economic shutdown 2.0,” said Bernard Baumohl, chief global economist at The Economic Outlook Group, who currently views the reopening as premature.

Federal Reserve Chairman Jerome Powell received good grades for his performance as Fed chair during the coronavirus pandemic, with 71.9% of economists assigning him an A grade, while 24.6% gave him a B. Just 1.8% gave him a C and F respectively.

“Like a good engineer, [Mr. Powell] opened the floodgates to drain the reservoir in advance of an impending flood of demand for liquidity,” said Georgia State University economist Rajeev Dhawan.

The grades marked an improvement from December, when 63.8% of economists gave Mr. Powell a B. Seventeen percent assigned him an A grade and 14.9% gave him a C.

To fight the coronavirus pandemic, U.S. central-bank officials cut rates to near zero, purchased huge quantities of government debt and began lending to American businesses.

Those purchases of debt are expected to get bigger. Economists project the central bank’s portfolio of bonds, loans and new programs will swell to $7.74 trillion in June from less than $4 trillion last year. The portfolio stood at $6.72 trillion on May 4.

Economists see the Fed’s balance sheet swelling to $9.29 trillion by December, $9.63 trillion by December 2021 and $11.27 trillion by December 2022. In that range, the portfolio would be more than twice the size reached after the 2007-09 financial crisis.


Economic Indicators – Coronavirus Lockdowns Trigger Big Drop in Consumer Prices

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The coronavirus pandemic pushed down April consumer prices by the most since the last recession as efforts to contain the virus disrupted demand for energy, travel, clothing and other goods and services.

The Labor Department said the consumer-price index fell by 0.8% last month, the second month in a row prices have eased since the pandemic reached the U.S. and the biggest drop since 2008. Business closures and stay-home orders aimed at containing the virus have created cheap oil, and falling prices for air travel, clothing, car insurance and other goods and services.

Excluding the volatile food and energy categories, so-called core prices decreased 0.4%, the largest monthly drop in records dating to 1957. While the month-to-month drops in inflation notched records, annual prices only reached the lows of the last expansion. Overall prices were up 0.3% from a year earlier, the lowest since 2015, and core prices were 1.4% higher from a year ago, the lowest since 2011.

Economists expect the decline in prices to be short-lived, with costs firming up as the U.S. reopens its economy and demand increases. Most don’t think the U.S. is likely to see price softness turn into a worst-case scenario as an extended period of deflation—when there are so many idle economic resources that businesses and workers are forced to lower prices and wages to generate demand for their goods and services.

“With economic activity beginning to open up, even if in a halting manner, while prices may slip further, they are unlikely to do so to nearly the extent seen in April,” said Richard Moody, chief economist at Regions Financial Corp.

A weak economy and softening inflation has had some investors betting the Federal Reserve will turn to negative interest rates to help boost growth. But some central bank research shows negative rates, adopted in other countries, have pushed inflation expectations lower, and Fed officials have concluded the tool’s costs outweigh uncertain benefits.

The Fed’s preferred inflation gauge is the personal-consumption expenditures price index, which has tended to run a little cooler than the CPI. The two generally move in the same direction, though measurement differences might produce a larger difference than usual now.

Lately, energy prices are the biggest drag on both. The Labor Department’s index for gasoline prices tumbled 20.6% in April from the prior month.

As recently as January, a barrel of U.S. oil cost more than $60. On April 20, U.S. crude futures for delivery the following month fell below $0 a barrel for the first time in oil market history. The coronavirus killed demand for fuel. A price war between Saudi Arabia and Russia alongside broad overproduction added to the oil glut.

One area where the pandemic is pushing prices higher: food.

The price index for food at home posted its largest monthly increase since February 1974. Americans stocked up at the pandemic’s outset. Since then, outbreaks have forced meat-processing plants to close and otherwise snarled supply chains. The April price index for meats, poultry, fish and eggs increased 4.3% from a month earlier.

Fed officials will look past oil markets and food costs to focus more on core prices. At least for now, coronavirus-related developments are pushing those lower. Indexes for apparel, auto insurance and airfares all posted their largest monthly declines on record.

“The fallout from the coronavirus has a large disinflationary effect on prices due to the large demand shock, plunge in oil prices, and strong dollar,” said Kathy Bostjancic, an economist at Oxford Economics. “A surge in inflation is the least of our worries.”

One reason deflation may not become an issue is government action to limit the impact of the virus’s disruption. The Fed and U.S. Treasury are pumping trillions of dollars into the economy, and many economists expect a sharp, short recession followed by a slow recovery.

A New York Fed survey out Monday found consumer inflation expectations for the next year and three years increased slightly—both now stand at 2.6%. “Respondents, however, increasingly disagree about the future path of inflation,” the survey said.

The market outlook appears less anchored. Yield movements in the Treasury inflation-protected securities, or TIPS, market show that compensation for inflation expected in five years, after the temporary impact of lower oil prices has faded, fell sharply in March before rebounding slightly, albeit at historically low levels.

Fed officials believe that consumer and market expectations for inflation affect behavior, becoming almost a self-fulfilling prophecy.

Another, longer-term concern is that large amounts of government borrowing and rising costs of doing business could push inflation uncomfortably high. Low rates and government deficits spurred consumer-price inflation after World War II and during the 1970s.

But with the loss of 20.5 million jobs and unemployment hitting a post-World War II high in April, the focus is more immediately on building a fiscal and monetary bridge until the coronavirus is contained.

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“In the near term it’s more likely, we think here at the Dallas Fed, we’ll have disinflation,” Dallas Fed President Robert Kaplan said earlier this month. “That’ll be in the shorter run, the next year or two. I do worry about, as we get back over the next few years to full capacity, with some of this stimulus and the size of the Fed’s balance sheet, do we start creating inflationary pressures? But that’s not going to be for two or three years.”

Global Economic Downturn – Today’s Downturn Is Comparable In Scale To That Of The 1930s

News stories often describe the coronavirus-induced global economic downturn as the worst since the Great Depression. This is likely to be literally true. Yet for many, the comparison does more to terrify than clarify. Economists say there is likely to be a big difference between a downturn that is the worst since the Depression and conditions as bad as the Depression.

“I don’t find comparing the current downturn with the Great Depression to be very helpful,” said former Federal Reserve Chairman Ben Bernanke, who has studied that 1930s era. “The expected duration is much less, and the causes are very different.”

The trajectory of the pandemic and economy remains uncertain. How quickly health officials can contain the crisis, how much the public will cooperate and whether policies will spark a swift recovery remains to be seen. Even so, many economists find a scenario rivaling the Great Depression in severity and duration hard to imagine.

“The breakdown of the financial system was a major reason for both the Great Depression and the 2007-09 recession,” Mr. Bernanke said. Today, however, “the banks are stronger and much better capitalized.”

By most estimates, the current downturn is likely to be comparable in scale and duration to that 2000s recession and the other major post-World War II recession, in the early 1980s.

Comparisons with the Depression are difficult because most of the data sets collected today didn’t exist in the 1930s. But some rough measures are available, including global trade tallies from the League of Nations, Federal Reserve data on factories and Works Progress Administration records on joblessness.

In the 1930s, industrial production fell by more than half. Production slowly made up ground for almost four years, only to decline sharply again in 1937-38. By contrast, production declined by about 15% in 2007-09 and 10% in the early 1980s.

When the coronavirus hit, industrial production had already been dipping as a result of the recent trade wars. While many factories closed as consumer demand shrunk, some are rapidly retooling. Auto makers General Motors Co. and Ford Motor Co., for example, have switched from making cars to ventilators. Medical-supply factories are struggling to keep pace with demand.

From 1929 to 1933, the economy shrank for 43 consecutive months, according to contemporaneous estimates. Unemployment climbed to nearly 25% before slowly beginning its descent, but it remained above 10% for an entire decade.

That compares with a 16-month decline in the early 1980s and an 18-month fall from 2007 to 2009. This time, many economists believe a rebound could begin this year or early next year if the virus is sufficiently contained.

While unemployment in the U.S. hit 14.7% in April and is likely to rise further, the blow today is softened by safety-net programs such as unemployment insurance.

“Many people are suffering now, and the economy won’t recover in only a quarter or two,” Mr. Bernanke said. “But if we’re able to get reasonable control of the virus, the economy will substantially recover, and this downturn should be much shorter than the Great Depression.”

The second quarter of 2020 is likely to be the worst ever for many economies. The median estimate of economists surveyed by The Wall Street Journal calls for a decline of 25% at an annual rate in the U.S. Some estimates are closer to 50%.

But annualized rates can be misleading. They assume that one quarter’s pace continues for a year. If 10% of the economy shuts down for one quarter, that would be considered a 40% decline at an annual rate.

“We’ve had this very abrupt, very sharp, immediate reduction in economic activity, driven by government policies to shut down economies. And because it’s very abrupt, the numbers are astronomical,” said Douglas Irwin, a professor at Dartmouth College who has studied U.S. trade policy during the Depression.

By contrast, he said, “The way the world evolved into the Great Depression was a slow and steady decline. It was a slow strangulation of the economy.”

As in the Depression, today’s collapse is global. But the scale is smaller, Gita Gopinath, chief economist at the International Monetary Fund, said in a briefing last month. The IMF estimates the world economy shrank about 10% during the Great Depression, versus an expectation of about 3% this year and an expected return to growth next year. Advanced economies shrank about 16% in the Depression, compared with about 6% forecast for this year.

A series of severe policy mistakes around the world exacerbated the length and severity of the Great Depression. Central banks tightened monetary policy to maintain the gold standard, which no longer exists. The result was severe deflation, which increased the value of debt and lowered incomes.

Governments also initially cut spending in reaction to declining revenue. And as economies deteriorated, countries raised trade barriers in an effort to protect their domestic industries. The result, though, was a global contraction in demand, which only deepened the depression.

This time, central banks around the world quickly slashed interest rates and deployed programs to prop up credit markets. Governments approved massive spending measures, including the roughly $2 trillion stimulus in the U.S., to help keep businesses afloat and protect jobs. And they haven’t raised trade barriers in response to the pandemic.

“I’m not going to say that everything in the policy is right, but we understand that delay worsens the economic outcomes,” said Catherine Mann, global chief economist at Citigroup.



The Mortgage Market Never Got Fixed After 2008. Now It’s Breaking

Many mortgage companies are nonbanks that don’t have deposits or other business lines to cushion them amid the coronavirus pandemic.

Ann Winn called her mortgage company to see about pausing payments in late March, soon after she had to shut down the salon she owns in a suburb of Austin, Texas.

What followed, she said, were hours of tense calls and emails with Freedom Mortgage Corp. The company agreed to let her skip a few payments—but only if she would repay them all in a lump sum this summer. Ms. Winn didn’t know when she would be back at work, so she declined.

“I’m just not going to pay my other bills,” she said, “because I don’t want to lose my home.”

The coronavirus pandemic has delivered a gut punch to the economy and the mortgage market is particularly exposed. The virus has forced millions of homeowners to suddenly stop making payments. At the same time, many mortgage companies aren’t built to handle an economic collapse or help their customers through it.

Many of them are nonbanks that don’t have deposits or other business lines to cushion them, and they have raised concerns that fronting payments for struggling borrowers such as Ms. Winn will quickly drain them of capital.

Years ago, the financial crisis revealed the folly of churning out “liar loans.” Regulators cracked down, and mortgages made today are generally more conservative. What regulators didn’t focus on was the strength of the mortgage companies themselves. Though the loans are sturdier, the infrastructure largely didn’t change.

Over the past decade, the business of originating and servicing mortgages has moved back toward nonbanks such as Freedom Mortgage. Nonbanks made 59% of U.S. mortgages last year, the highest level on record, according to industry-research group Inside Mortgage Finance. They also made a large proportion of U.S. mortgages before 2008 but many went bust when the crisis hit.

Many nonbanks, like United Wholesale Mortgage and LLC, are barely known outside the industry but dominant inside it. Quicken Loans Inc., one of the few with wide name recognition, ranked as the largest mortgage lender by originations for the first time this year, elbowing out Wells Fargo and JPMorgan Chase.

As big banks have refocused their mortgage operations on wealthier borrowers, nonbanks have stepped into the void, often representing the only path to a mortgage for buyers of lesser means. Their retreat could lock many would-be borrowers out of homeownership and make it harder for the economy to bounce back.

Nonbanks also have expanded in the crucial business of servicing mortgages. They now service roughly half of them, five times their share from a decade ago, according to the Urban Institute.

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In good times, that task involves collecting payments from borrowers and handing them to investors that own the loans, plus handling odds and ends such as taxes. In exchange, the servicer gets a slice of the interest. In bad times, servicers are supposed to create new payment plans for struggling borrowers, which takes much more work and expense. When all else fails, servicers initiate foreclosures.

For years after the crisis, regulators, mortgage executives and consumer advocates discussed how to improve this market. They floated ideas about changing the way servicers are paid so they collect a bigger fee when a loan becomes delinquent. They also considered having the servicers fund a central utility to handle defaulted mortgages. But those ideas never gained much traction, according to people involved.

“There was a big focus on the consumer experience,” said Michael Bright, the former head of government mortgage corporation Ginnie Mae, which backs Federal Housing Administration loans. “But there wasn’t much focus on the quality of a servicer.”

The structure of the U.S. mortgage market is much the same as it was before the crisis. Pools of mortgages are packaged and sold to investors around the world. When a borrower stops paying, servicers are caught in the middle, forced to front payments to the investor, even though they aren’t receiving money from the borrower.

The servicer will eventually get reimbursed if the mortgage is one of the roughly two-thirds guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae. But that is a slow process and in some cases can take years.

Lawmakers recently outlined how struggling borrowers can request so-called forbearance plans, by which they pause their monthly payments. If the mortgage is government-backed, then companies are generally supposed to grant the request.

That has thrust both banks and nonbanks into the position of cushioning the blow for their customers. Nonbanks, which depend on short-term bank loans to fund their daily operations, are struggling to do so.

“This is a systemic problem,” said Karan Kaul, a senior research associate at the Urban Institute.

About 7.5% of borrowers had obtained forbearances as of April 26, according to a survey by the Mortgage Bankers Association, or MBA. That means about 3.8 million homeowners are skipping their monthly payments with permission.

If forbearance rates reach the mid-to-high teens, few servicers are expected to have the cash to meet their advance obligations, according to Warren Kornfeld, who covers nonbank mortgage companies at Moody’s Investors Service. As a result, many are now trying to gain access to additional cash.

Mortgage servicers, both banks and nonbanks, were on the hook for about $4.5 billion a month in servicing advances on government-backed loans because of forbearances as of Thursday. That is roughly 25 times more than they were on the hook for at the end of February, according to Black Knight Inc., a mortgage-data and technology firm.

Ms. Winn and her husband bought their Leander, Texas, home in 2014 using the FHA loan program, which is meant for first-time and modest-income buyers. Later, they learned their lender had passed the servicing rights to Freedom.

Ms. Winn had little interaction with Freedom until calling in March. A representative told her she could skip payments for April, May and June, but would then have to pay four months all at once. Another representative told her that she could later ask to tack the missed payments onto the end of the loan, but that there was no guarantee she would be approved.

In late April, she received a letter saying she had been automatically opted into the first plan. She intends to keep making her monthly payments anyway, since she doesn’t want to pay for four months at once.

Chief Executive Stanley Middleman said in a statement that Freedom is “managing a great deal of unplanned activity” but plans to fix any issues that arise.

“We are doing the best we can and will continue to do so,” Mr. Middleman said.

The stimulus bill provided little detail on when borrowers would have to make up deferred payments. But the regulator that oversees Fannie Mae and Freddie Mac, the government-sponsored mortgage companies that back conventional loans, clarified recently that its homeowners won’t have to make up their missed payments all at once. The FHA program has made similar comments.

Industry representatives say that forbearance plans were rolled out on a vast scale very quickly, which led to confusion among both servicers and borrowers. Bob Broeksmit, CEO of the MBA, acknowledged that there have been issues between servicers and borrowers but said that recent guidance is likely to bring more clarity.

The borrowers the nonbanks serve are often the ones that most need help. Last year, nonbanks made 86% of FHA mortgages. As of Thursday, roughly 13% of FHA loans had forbearances, according to Black Knight.

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Nonbanks say they have spent significant time bolstering their businesses for a downturn. Some said in recent earnings reports that they now expect the coronavirus fallout to be smaller than they initially feared. Still, Ginnie Mae has set up a lending facility to help companies that are out of options. Fannie Mae and Freddie Mac are only requiring servicers to advance four months’ worth of payments.

The health of nonbanks ultimately depends on keeping their funding. Worried about the surge in borrowers seeking relief, some banks have recently curtailed this lending.

Mortgage companies, both banks and nonbanks, are also pulling back on some lending to borrowers. Credit availability in April fell to its lowest since 2014, according to the MBA.

Lenders are cutting back in particular for borrowers with lower credit scores, according to the Urban Institute. But the contraction in credit is spreading to all types of loans—from jumbo mortgages to cash-out refinances.

Beverly Harris was in the process of buying a home in the Palm Springs, Calif., area in March when the type of unconventional loan she had been pre-approved for suddenly became unavailable.

The retiree, who has a high credit score and was planning to put 20% down, was expecting to use a loan that qualifies the borrower based on assets rather than income. She estimates she checked with 15 different mortgage companies and banks. All of them had stopped making those types of loans.

For now, Ms. Harris is staying put in her rental.


U.S. Nonfarm Private Sector Lost 20 Million Jobs

The nonfarm private sector in the U.S. lost about 20.2 million jobs from March to mid-April as much of the country’s economy ground to a halt during the coronavirus pandemic.

The losses were the steepest among large businesses with 500 or more employees, which saw a decline of roughly 9 million jobs during the month, according to the ADP National Employment Report for April.

The report also said the number of job losses for its March report was revised to 149,000, instead of 27,000.

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Economists polled by The Wall Street Journal had expected the April report to show job losses of 22 million. The ADP report is based on data through April 12. The ADP Research Institute, working with Moody’s Analytics, publishes the report each month.

The service-providing sector was responsible for a majority of the losses, shedding 16 million jobs in the month. The number of service jobs lost was especially high in the leisure and hospitality sector, which saw a decline of 8.6 million jobs. The goods-producing sector was responsible for 4.2 million jobs lost.

Small businesses of fewer than 50 employees lost 6 million jobs in April, while medium businesses lost 5.3 million jobs.

“Job losses of this scale are unprecedented,” said Ahu Yildirmaz, the co-head of the ADP Research Institute. “The total number of job losses for the month of April alone was more than double the total jobs lost during the Great Recession.”


The U.S. Department of Labor is expected to release its April employment report, which covers the same period in April, on Friday. Economists are expecting it to show nonfarm payrolls down 21.5 million jobs for the month, and a rise in the unemployment rate to 16%, from 4.4% in March.



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Home Prices Are Rising During The Pandemic

The economy is shrinking, businesses are closing and jobs are disappearing due to the coronavirus pandemic. But in the housing market, prices keep chugging higher.

Home prices plunged during the last recession after a housing crash caused millions of families to lose their homes. Home values could start to erode again, especially when mortgage forbearances end, some economists warn.

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But that hasn’t been the case so far. The median home price rose 8% year-over-year to $280,600 in March, according to the National Association of Realtors. While buyer demand has softened and sales fell 8.5% that month from the prior month, the supply of homes on the market is contracting even faster, recent preliminary data shows.

“Demand absolutely just got a kick in the gut, but at the same exact time, so did supply,” said Skylar Olsen, senior principal economist at Zillow Group Inc.

Homes typically go under contract a month or two before the contract closes, so the March NAR data largely reflects purchase decisions made in February or January.

Even by the end of last month, many sellers were reluctant to cut prices. Only about 4% of sellers cut their prices in the week ended April 25, down from 5.7% during the same week last year, according to

Some sellers say they are hanging tough because they believe their homes aren’t moving because buyers haven’t viewed them in person or are reluctant to make offers right now, not because the asking price is too high. They are waiting for stay-at-home orders to ease before deciding whether to lower the price.

“People really aren’t leaving their homes” to go house-hunting, said Sarah McMurdy, who listed her Bethesda, Md., house in late March and then opted to temporarily take it off the market in April due to the pandemic. “We’re not looking to fire-sale the house. We’re in no rush. We would rather wait this out.”

Real-estate brokerage Redfin Corp. said its measure of homebuying demand, which tracks buyer inquiries, was down 15% in the week ended April 26 compared with before the pandemic struck. Mortgage applications for home purchases around the same time were down 20% from a year earlier, according to the Mortgage Bankers Association.

Total listings of homes for sale, meanwhile, have hit a five-year low, while the median listing price was up 1% from last year at $308,000, Redfin said.

The housing market has been undersupplied for years. During the pandemic it may get worse. There were 1.5 million units for sale at the end of March, NAR said, down 10.2% from a year earlier. Homeowners are waiting to list their houses, real-estate agents say, because they have decided not to move or they are worried about letting buyers into their homes during a pandemic.

Still, some buyers are hoping for bargains. Haas El Farra and his wife were under contract to buy a house in Southern California in early March. As the coronavirus epidemic worsened, they worried they were buying at the top of the market and asked the seller to lower the price. When the seller refused, they pulled their bid and decided to keep looking for a better deal.

“Hopefully something nicer than what we were looking at will come up at an affordable price,” said Mr. El Farra, a portfolio manager.

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Prices in the Midwest showed the strongest annual growth at 9.7% in March. In the Cincinnati area, homes are selling for higher than listing price, said Donna Deaton, vice president at Re/Max Victory in Liberty Township, Ohio. Large companies in the area are still hiring, she said.

“For the most part, we’re still [competing against] multiple offers just about on every single thing,” she said.

While many economists expect home sales to tumble this year, many forecasts call for prices to climb slightly or hold flat. Mortgage-finance giant Fannie Mae said in April that it expects the median existing-home price to tick up to $275,000 this year from $272,000 last year. Capital Economics forecasts average home prices this year will fall 3% compared with last year. Zillow said Monday that home prices are likely to drop 2% to 3% from previous levels by the end of the year and recover in 2021.

In a forecast released Tuesday, housing-data provider CoreLogic called for nationwide home prices to rise 0.5% between March 2020 and March 2021. CoreLogic forecast annual price declines in some cities including Houston, Miami and Las Vegas.

A major uncertainty is whether mortgage-forbearance policies will prevent a wave of distressed sales. More than 7% of mortgages were in forbearance in the week ended April 30, according to mortgage-data company Black Knight Inc., and some homeowners can get forbearance for up to a year. But homeowners could struggle to make payments after the forbearance period ends.

“In the next 12 months it’s hard to anticipate price declines because of the mortgage forbearance in place,” said Lawrence Yun, NAR’s chief economist. “You would have to see continuing job losses for a prolonged period leading to foreclosures, and even then we may not have oversupply.”




The Coronavirus Shutdown Will Induce The Sharpest Economic Downturn And Push The U.S. Budget Deficit To The Highest Levels Since The 1940s

Some degree of social distancing is expected to continue through the first half of 2021, the CBO said.

The economy is likely to shrink 12% in the second quarter—a 40% drop if it were to persist for a year—and the jobless rate will average 14%, the nonpartisan research service said Friday. Job losses will come to 27 million in the second and third quarters.

The federal budget deficit is expected to reach $3.7 trillion by the end of the fiscal year on Sept. 30, the CBO said, up from about $1 trillion in the 12 months through March. Congress has authorized unprecedented deficit spending to offset the shutdown of vast swaths of the U.S. economy.

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As a proportion of gross domestic product, the deficit will end the fiscal year at almost 18%, its highest level since the year after World War II ended and up from 4.6% in 2019, the CBO said.

Federal debt held by the public is projected to hit 101% of gross domestic product by the end of the fiscal year, up from 79% at the end of fiscal 2019, the CBO said.

The silver lining is that interest rates are projected to fall so low that the government’s net borrowing costs will decline even with the dramatic increase in borrowing, the CBO said. It sees the yield on 10-year Treasury notes hovering at 0.7% in the second half of this year and through 2021.

The updated forecasts, published in a blog post by CBO Director Phillip Swagel, rest on assumptions that are “subject to enormous uncertainty.” These include the extent to which the coronavirus is brought under control in the coming months and the possibility of a subsequent re-emergence.

Some degree of social distancing is expected to continue through the first half of 2021, the CBO said. But those measures are projected to diminish by roughly 75% in the second half of this year relative to the April-June quarter and continue easing into 2021.

As a result, economic activity is projected to recover from its current nadir, but only gradually. GDP is expected to contract 5.6% in 2020 from last year and to grow 2.8% in 2021.

The unemployment rate is seen topping out at 16% in the third quarter and declining to 9.5% by the end of 2021. But the CBO cautioned that those numbers understate the extent of damage because they only count people who are actively looking for a job.




Collapse In Aircraft Demand Drove Down March Factory Orders

Orders for long-lasting factory goods fell sharply in March, driven by a collapse in demand for commercial aircraft and parts as the coronavirus spread around the world.

New orders for durable goods—products designed to last at least three years—declined 14.4% in March from the previous month, the biggest monthly drop since August 2014, the Commerce Department said Friday. New orders for February were revised to 1.1%.

Durable-goods orders are likely to decline further as the full effect of the coronavirus-related shutdowns becomes clear in the coming months.

Orders for commercial aircraft and parts fell by more than $16.3 billion, a 296% decline. Since orders are recorded on a net basis, the figure incorporates canceled orders. New orders for automobiles and parts fell 18.4% in March.

Excluding the volatile transportation sector, orders were down a more modest 0.2%. New orders for nondefense capital goods excluding aircraft—a closely watched proxy for business investment—were up 0.1%.

Analysts said the transportation sector appears to have been the first to bear the brunt of the economic shock related to the coronavirus. Other sectors will probably show similar sharp declines in the months ahead, said Gregory Daco, chief U.S. economist at Oxford Economics.

“We’re going to see steep drops across different categories,” he said.

The March durable goods data cover the month when the coronavirus outbreak started causing massive shutdowns across the U.S. economy.

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Australia Consumer Sentiment Collapses To 30-Year Low

A measure of Australian consumer sentiment collapsed in April to a 30-year low as social distancing restrictions due to the coronavirus pandemic threatened to push the country’s economy into its first recession in three decades.

Wednesday’s survey showed the Melbourne Institute and Westpac Bank (AX:WBC) index of consumer sentiment plunged 17.7%, its biggest monthly decline since records began 47 years ago.

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The index is now at 75.6, the lowest since 1991 during Australia’s last recession.

The survey comes as the coronavirus outbreak has spread in Australia from less than 100 cases last month to around 6,500 now, killing 62.

The details of the survey reflected large shocks to jobs and spending.

Listed companies in Australia and New Zealand have already laid off or began considering laying off at least 121,520 people, temporarily or permanently.

A separate survey of businesses on Tuesday showed conditions and confidence plummeted in March.

To support the economy, Australia’s government has announced a A$320 billion ($205.3 billion) package, including a job-keeper allowance to help businesses keep staff.

Still analysts are predicting the unemployment rate to shoot above 10%.

Wednesday’s survey showed all five sub-indexes fell in April. The biggest declines were in the near-term outlook for the economy and in attitudes towards spending.

Separately, a Commonwealth Bank (AX:CBA) analysis also out on Wednesday showed total credit and debit card expenditure in the week to April 10 dropped 20% from a year ago. Spending on services plummeted 44%.

Other bleak economic data on Wednesday showed a 90% drop in tourist arrivals from China in February from a year ago. Arrivals from Hong Kong, Singapore and Germany also slumped, according to the Australian Bureau of Statistics (ABS).

Despite the gloomy reading, Westpac Chief Economist Bill Evans expects that economic growth will resume by the fourth quarter of 2020 after three quarters of contraction.

“Australia’s pandemic experience to date has been much less debilitating than that of the hardest hit areas abroad,” Evans noted.

“The number of cases is high but has not overwhelmed Australia’s health system, with recent evidence showing a clear slowing in new cases that indicates policy measures are working to contain the spread,” he added.

Supporting that view, the International Monetary Fund (IMF) noted Australia’s fiscal response was “swift and sizable”.

The IMF predicted a 6.7% economic contraction this year, the deepest recession in Australia’s history, followed by a 6.1% expansion in 2021. Unemployment is expected to average 7.6% in 2020 and 8.9% in 2021.



China’s Trade Slump Eases In March, But Pandemic Set To Deepen Export Downturn

The plunge in China’s exports and imports eased in March as factories resumed production, but shipments are set to shrink sharply over coming months as the coronavirus crisis shuts down many economies and puts the brakes on a near-term recovery.

Financial markets breathed a sigh of relief after customs data on Tuesday showed overseas shipments fell 6.6% in March year-on-year, improving from a 17.2% slide in January-February, as exporters rushed to clear a backlog of orders after forced production shutdowns.

Economists had forecast shipments to drop 14% from a year earlier.


Yet, while the trade figures were not bad as feared, analysts say the export and overall growth outlook for the world’s second-biggest economy remains grim as the pandemic has brought business activity across the globe to a standstill.

“The above-expectation March trade figures do not mean that the future is carefree,” said Zhang Yi, Beijing-based chief economist at Zhonghai Shengrong Capital Management.

Zhang said he expects first-quarter gross domestic product data on Friday will likely show a contraction of 8% – the first quarterly slump since at least 1992. Analysts’ forecasts for China’s first quarter GDP ranged widely between a contraction of 2% and 16%.

“A decline in exports throughout the second quarter has been the market consensus now and a drop of 20% or more is a high-probability event. For policymakers, more policies should be rolled out to address the possible societal issues stemming from mass-scale unemployment,” Zhang said.

The data showed imports slid 0.9% from a year earlier, also above market expectations of a 9.5% drop, which the customs attributed to improving domestic demand. They had fallen 4% in the first two months of the year.

The better imports picture partly reflected shipments that were stuck in ports being cleared and catch-up demand as authorities eased restrictions. Yet, domestic consumption was far from robust with key imports such as iron ore dipping in March, underlining the broad economic strains.

“Imports should hold up better given that domestic demand looks set to stage a further recovery in the coming months,” said Julian Evans-Pritchard, senior China economist at Capital Economics.

“But the quarter of China’s imports that feed into China’s export sector will continue to fall and hold back the recovery in imports.”

The overall trade surplus last month stood at $19.9 billion, compared with an expected $18.55 billion surplus in the poll and a deficit of $7.096 billion in January-February.

Stock markets in Asia extended their gains after China’s trade report, while risk sensitive currencies including the Australian and New Zealand dollars as well as the pound pulled ahead, mainly on relief on the less gloomy data. [MKTS/GLOB]


China, where the novel coronavirus first emerged late last year, has reported 82,249 infections and 3,341 deaths as of April 13. Worldwide, infections have surpassed 1.8 million with over 119,000 deaths.

The pandemic’s sweeping impact on businesses and consumers has triggered an unprecedented burst of stimulus from policymakers in the past two months, with the World Trade Organization forecasting that goods trade would shrink more steeply this year than during the global financial crisis.

Beijing is trying to restart its economic engines after weeks of near paralysis to contain the pandemic that had severely restricted business activity, flow of goods and the daily life of people.

But as the virus rapidly spread to almost all of China’s trading partners, severely restraining overseas demand particularly in European and U.S. markets, Chinese factories’ export orders have been scrapped. Many privately-owned exporters have been forced to fire workers and warned about factory closures in not too distant future.

UBS Economist Tao Wang predicted that exports would decline by 20% on-year in the second quarter and 12% for the whole of 2020.

Wenzhou Juna Shoe Industry Co, which used to export 90% of its leather shoes to Russia, South Korea and Australia, had 30% of its orders cancelled last month, with clients delaying the shipments of another 20%, according to a report from China Central Television (CCTV) on Sunday.

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Half of its production lines were suspended overnight, said CCTV, citing the company manager Wan Jiayong.

Customs spokesman Li Kuiwen also warned about the difficulties facing foreign trade.

“Shrinking global demand is set to cause a shock to our country’s exports, and issues such as declining export orders have gradually emerged. The difficulties facing our foreign trade development cannot be underestimated,” said Li.

Indeed, both official and private factory surveys for March showed new export orders declined even further from February when production in the country was paused, with few signs of a strong near-term recovery.

Analysts say consumer appetite would also remain depressed as many people are worried about the possibility of new infections, job security and potential cuts to wages as the economy struggles, analyst warned.

“The sharp decline in exports and trade could put another over 10 million jobs related to exports at risk in the next couple of quarters,” UBS’ Wang said.


French Manufacturing Plunges Into Deepest Slump In Seven Years

French manufacturing activity fell in March at the fastest pace in more than seven years as a nationwide lockdown to contain the coronavirus outbreak hits companies and their clients, a monthly survey showed on Wednesday.

Data compiler IHS Markit said its final Purchasing Managers’ Index (PMI) fell to 43.2 points from 49.8 in February, slightly higher than a preliminary reading of 42.9.

The plunge to its lowest point since January 2013 brought the index far away from the key 50-point line dividing expansions in activity from contractions.

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Meanwhile, manufacturers’ output and the flow of orders for new business fell to their lowest levels since the 2008-2009 global financial crisis that unleashed one of the deepest recessions in decades in many major economies.

As the coronavirus spread in France, the government imposed a lockdown on March 17, forcing large swathes of the euro zone’s second-biggest economy to shut down.

“The supply of goods is diminished, with supplier delivery times lengthening sharply and staff unable to work amid factory closures,” IHS Markit economist Eliot Kerr said.

“Meanwhile, restricted movement of people and social distancing has acted to stifle demand, delivering a double-barrelled blow to the economy,” he added.

The INSEE official statistics agency estimated last week that the economy was operating at two-thirds of its normal level, which was likely to knock 3 percentage points off growth for each month the country spends in lockdown.



Economic Indicators: Consumer Sentiment in U.S. Slumps by Most Since October 2008

U.S. consumer sentiment plummeted in March by the most since October 2008 as mounting Covid-19 cases nationwide and business closures elevated concerns about the economy.

The University of Michigan’s final sentiment index for the month slumped 11.9 points to a three-year low of 89.1, data Friday showed. The median forecast in a Bloomberg survey of economists called for a decline to 90 after a preliminary March reading of 95.9.

Ratings for current conditions also decreased by the most since 2008, and a measure of the economic outlook dropped to the lowest level in more than three years. Stocks fell and Treasuries advanced as investors assessed the pandemic’s impact on the economy.

“The outlook for the national economy for the year ahead changed dramatically in March, with the majority now expecting bad times financially in the entire country,” Richard Curtin, director of the Michigan sentiment survey, said in a statement. “Perhaps the most important takeaway is that the largest proportion of consumers in nearly 10 years anticipated that the national unemployment rate will increase in the year ahead.”

The report provides one of the more-sobering pictures yet of how the widespread economic halt, amid efforts to help contain the virus, is impacting consumers’ attitudes. The March figures represent a drastic departure from just a month earlier, when a strong job market and cheap fuel contributed to the second-highest sentiment reading since 2004.

The university’s final survey for the month included responses through March 24, a stretch that includes significant upheaval and uncertainty in day-to-day living and the labor market, as well as in financial markets. A report yesterday showed initial claims for unemployment benefits soared to a record 3.28 million last week.

“Stabilizing confidence at its month’s end level will be difficult given surging unemployment and falling household incomes,” Curtin said. “Mitigating the negative impacts on health and finances may curb rising pessimism, but it will not produce optimism.”

April consumer sentiment data will reflect the surge in dismissals and growing Covid-19 cases, as well as progress on Capitol Hill toward a $2 trillion economic-relief package that includes direct payments to many Americans.

Most notably, the number of confirmed cases nationwide continues to rise. There are currently more than 85,000 with the disease in the U.S., the most in the world, compared with 62 people at the end of February.

The Michigan data showed an index of buying conditions for durable goods dropped in March to the lowest level since 2014.

Year-ahead financial prospects declined across all age and income subgroups, though modestly as respondents anticipated the negative effects from the pandemic would be short-lived.

The impact of the virus on consumer sentiment are likely to become more evident as monthly reports capture the tectonic shift in economic and market conditions seen over the last month. The Conference Board will publish its March confidence reading on Tuesday. Meanwhile, Bloomberg’s weekly index fell to a four-month low.



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Economic Indicators: U.K. House Sales Set To Plunge 70% On Coronavirus Lockdown Impact

U.K. house sales are set to plunge by 70% in the next three months as the coronavirus outbreak batters the economy.

The slump in the second quarter, which is usually among the most active sales periods, will be followed by a further decline in the three months through September, according to a report on Thursday from real estate portal Zoopla. The hit to prices should feed through more slowly and will depend on the extent of the economic slowdown.

Covid-19 presents a major new challenge,” Richard Donnell, director of research and insight at Zoopla, said in an emailed statement. “The initial impact of external shocks is to reduce consumer confidence and put a brake on housing demand and the number of people moving home, which we can see in our latest figures.”

The partial lockdown of the country ordered by Prime Minister Boris Johnson has restricted people’s movements and closed all but essential businesses. That has made it nearly impossible for sellers to market homes, with potential buyers unable to view properties. And the government has warned that stricter rules could be imposed if necessary.

While the logistics of the lockdown impede deals, the economic fallout from the pandemic will dictate the impact on house prices, according to Zoopla. “The greater the economic shock and rise in unemployment, the greater the potential impact on house prices over the spring and into the summer months,” according to the report.

The U.K. economy will contract by at least 10% in the first half of the year, according to Bloomberg Economics’ estimates. Senior U.K. economist Dan Hanson said support provided by the Bank of England and the Treasury should prompt a turnaround in the second half of the year if the outbreak is contained by the summer.

The virus is already weighing on deals, with the number of homes placed under offer in the seven days through March 22 down 15% from the previous week, Zoopla data show.

Prior to the outbreak, the U.K. housing market was off to its best start in four years, with price growth of 1.6% in February, up from 1.2% a year earlier, according to Zoopla’s U.K. cities index.




China January-February Exports Tumble


China’s exports contracted sharply in the first two months of the year, and imports slowed, as the health crisis triggered by the coronavirus outbreak caused massive disruptions to business operations, global supply chains and economic activity.

The gloomy trade report is likely to reinforce fears that China’s economic growth halved in the first quarter to the weakest since 1990 as the epidemic and strict government containment measures crippled factory production and led to a sharp slump in demand.

Overseas shipments fell 17.2% in January-February from the same period a year earlier, customs data showed on Saturday, marking the steepest fall since February 2019.

That compared with a 14% drop tipped by a Reuters poll of analysts and a 7.9% gain in December.

Imports sank 4% from a year earlier, but were better than market expectations of a 15% drop. They had jumped 16.5% in December, buoyed in part by a preliminary Sino-U.S. trade deal.

China ran a trade deficit of $7.09 billion for the period, reversing an expected $24.6 billion surplus in the poll.

Factory activity contracted at the fastest pace ever in February, even worse than during the global financial crisis, an official manufacturing gauge showed last weekend, with a sharp slump in new orders. A private survey highlighted similarly dire conditions.

The epidemic has killed over 3,000 and infected more than 80,000 in China. Though the number of new infections in China is falling, and local governments are slowly relaxing emergency measures, analysts say many businesses are taking longer to reopen than expected, and may not return to normal production till April.

Those delays threaten an even longer and costlier spillover into the economies of China’s major trading partners, many of which rely heavily on Chinese-made parts and components.

China’s trade surplus with the United States for the first two months of the year stood at $25.37 billion, Reuters calculation based on Chinese customs data showed, much narrower than a surplus of $42.16 billion in the same period last year.

Soybean imports in the first two months of 2020 rose by 14.2% year-on-year as cargoes from the U.S. booked during a trade truce at the end of 2019 cleared customs.

After months of tensions and tariff hikes that dragged on bilateral trade, the world’s two biggest economies agreed an interim trade deal in January that cut some U.S. tariffs on Chinese goods in exchange for Chinese pledges to massively increase purchases of U.S. goods and services.

The U.S. expects China to honor these commitments despite the coronavirus outbreak, a senior U.S. official said in February.


The supply and demand shocks in China are likely to reverberate through global supply chains for months, and the rising number of virus cases and business disruptions in other countries is raising fears of a prolonged global slowdown or even recession.

In response, global policymakers have stepped up efforts to cushion the economic blow of the epidemic, with the U.S. Federal Reserve delivering an emergency rate cut last week.

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Shortages of vital parts and components from China last month cost other countries and their industries $50 billion, a United Nations agency said on Wednesday.

The virus outbreak escalated in late January just as many businesses were winding down operations or closing for the long Lunar New Year holidays, and as hundreds of millions of Chinese were returning to their hometowns.

China customs said last month it would not release separate figures for January and would combine January and February instead, in line with how some of the country’s other major indicators are released early in the year, which is intended to smooth distortions created by the holidays.

Tough public measures such as restrictions on travel and quarantines meant many of these people were unable to return to their jobs in offices, factories and ports until only recently.

Some firms which have reopened have faced shortages of parts and other raw materials as well as labor, while others report inventories of finished goods such as steel are piling up as downstream customers like car plants slowly crank up production again.

Iron ore imports rose 1.5% over the first two months, supported by firm demand at steel mills even though the coronavirus outbreak had disrupted downstream sectors.

Parts of central Hubei province, the epicenter of the outbreak and a major transport and manufacturing center, are expected to remain under lockdown well into March.

Analysts at Nomura estimate only 44% of the businesses worst affected by the outbreak had resumed operation as of March 1, and 62.1% across the economy as a whole. As such, they forecast economic growth will slump to 2% in the first quarter year-on-year, from 6% in the previous quarter.

Beijing has already stepped up support measures, including offering cheap loans to affected businesses, and policy sources have told Reuters that more steps are expected as authorities try to cushion the epidemic’s impact on the economy.

China’s commerce ministry said on Thursday that more than 70% of foreign trade companies in the coastal provinces have resumed work.

But financial magazine Caixin reported this week that some companies were keeping machines running and lights open throughout the day even though they have no goods to produce, in a bid to allow managers and local officials to inflate the official work resumption rate. Reuters wasn’t able to verify this report.



China Economy Seen in Deeper Contraction on Factory Drop

China’s economy could be heading for a worse-than-expected first-quarter contraction after the country’s manufacturing sector reported activity at a record low in February due to the coronavirus outbreak.

The manufacturing purchasing managers’ index plunged to 35.7 in February from 50 the previous month, according to data released by the National Bureau of Statistics on Saturday. Even before that data, the median forecast of economists surveyed by Bloomberg News was that the economy would shrink in the three months through March from the last quarter of 2019, and the surprisingly weak data prompted further cuts to that view.

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Gross domestic product may now shrink by 2.5% in the first quarter from the previous period, Nomura Holdings Inc. economists led by Lu Ting said in a report Saturday after the data release. That was a cut from their previous forecast of -1.5% in a Bloomberg survey last week. Standard Chartered (LON:STAN) Plc already expected a 1.5% contraction before the data, while Australia & New Zealand Banking Group Ltd. is forecasting a 2% drop, according to reports after the release.

Bloomberg Economics now expects a contraction of 3%, but cautioned that it’s subject to considerable uncertainty.

“The extent of the slump in China, the blow to global supply chains, and the trajectory of the outbreak in China and globally are all difficult to gauge with a high degree of accuracy,” Bloomberg economists led by Chang Shu wrote in a report.

China Factory Activity Weakest on Record Due to Coronavirus

If the economy were to contract, it would be the first time that’s happened in comparable data dating back to 2011.

Pacific Investment Management Co. also sees the virus outbreak causing a contraction, forecasting a 6% annualized drop in China’s first-quarter GDP, while Barclays (LON:BARC) Bank Plc economists see an 8.9% drop, followed by a quick recovery. Pimco’s view gels with Goldman Sachs Group Inc (NYSE:GS). economists, who said in a report Friday that global GDP will shrink on a quarterly basis in the first two quarters of this year before rebounding in the second half.


The factory PMI data may improve in March, CICC analysts including Yue Yan wrote in a note Saturday.

“Strenuous containment measures were taken after the outbreak of COVID-19, which understandably dampened economic activities in the short term,” they wrote. “With the outbreak gradually under control, government agencies have been clearing the unwanted obstacles for production resumption.”

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Nomura’s Lu also expects the March PMIs to rebound, but says activity data will be zero or negative as businesses won’t be completely back.

On a year-on-year comparison, the median forecast for first-quarter GDP growth is 4.3%. That was before Saturday’s data. Nomura and ANZ both now see it rising 2%, while Standard Chartered expects a 2.8% expansion.




China Makes Bad Loans Disappear as Virus Pummels Banks

Chinese banks are taking extraordinary measures to avoid recognizing bad loans, seeking to shield themselves and cash-strapped borrowers from the economic fallout of the coronavirus outbreak.

Some of the measures, which include rolling over loans to companies at risk of missing payment deadlines and relaxing guidelines on how to categorize overdue debt, have the explicit approval of regulators in Beijing. Some lenders are also refraining from reporting delinquencies to the country’s centralized credit-scoring system and allowing borrowers to skip interest payments for as long as six months, according to people familiar with the matter, who asked not to be named discussing internal decisions.

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The moves will buy time for both Chinese companies and the nation’s $41 trillion banking industry, after the outbreak brought much of the world’s second-largest economy to a standstill. But they’re also fueling concern about a buildup of hidden risks on lenders’ balance sheets. Some analysts worry that China is reversing a multi-year push to increase the transparency of its financial system and undermining the long-term health of banks.

“This will provide breathing space,” said Harry Hu, a credit analyst at S&P Global Ratings. “It will also likely undermine standards, making some Chinese banks less creditworthy in the long run.”

Earlier this month, S&P said a prolonged health emergency could cause China’s non-performing loan ratio to more than triple to about 6.3%, amounting to an increase of 5.6 trillion yuan ($800 billion) in bad debt.

The push by banks and regulators to tamp down NPLs is part of a broader effort by President Xi Jinping’s government to shore up the Chinese economy, which some forecasters say may suffer a rare quarter-on-quarter contraction in the first three months of this year. In addition to pumping billions of yuan into the banking system to make it easier for lenders to extend credit, authorities have cut interest rates, reduced taxes and pledged to adopt more “proactive” fiscal policies.

Shares of Chinese banks continued to under-performer the benchmark index this year in Hong Kong. The four biggest state-owned banks are trading at an average 0.5 times their estimated book value for this year, near the record low.

The NPL measures mark an abrupt shift in China’s approach toward financial regulation. Authorities in Beijing have spent the past three years trying to instill more discipline in the banking system and develop credit markets that more accurately price risk. As part of that effort, they’ve encouraged banks to be more diligent when accounting for bad loans.

The outbreak has changed the government’s priorities. In a press conference this week, Ye Yanfei, an official at the China Banking and Insurance Regulatory Commission, said policy makers need to be more tolerant when it comes to bad loans. “Saving corporates now is saving banks themselves,” Ye said.

China isn’t the only country to have relaxed accounting standards for banks during a crisis. In April 2009, during the depths of the global recession, mark-to-market rules in the U.S. were eased after banks complained that they resulted in bigger-than-warranted writedowns on thinly traded mortgage securities. While critics of the decision said it reduced transparency, it arguably helped big American lenders recover more quickly from the crisis.

China’s ability to control the pace of NPLs during economic shocks is an advantage of its centralized financial system, according to Leland Miller, the chief executive officer of China Beige Book.

“When you have a party that controls all the counterparties in the economy — you have state banks loaning to state enterprises and you have state banks loaning to small- and medium-sized enterprises — you can tell them to lend,” Miller said in an interview on Money Undercover with Bloomberg TV’s Lisa Abramowicz. “You never have to freeze up liquidity in the same way that a commercial financial system would work.”

Yet even if China’s banks turn on the credit taps, lots of businesses may struggle to secure the funding they need to stay afloat.

A survey of small- and medium-sized Chinese companies conducted this month showed that a third of respondents only had enough cash to cover fixed expenses for a month, with another third running out within two months. About two-thirds of the country’s 80 million small businesses, including many mom-and-pop shops, lacked access to loans as of 2018, according to China’s National Institution for Finance & Development.

It remains to be seen whether the benefits of delaying NPLs will outweigh the costs. Much depends on how quickly Chinese authorities can contain the outbreak and get the country back to work. In the week to Feb. 21, the economy was likely running at 50%-60% capacity, according to Bloomberg Economics.


A sharp recovery in coming months would likely ease concerns that banks are obscuring the true health of their balance sheets. “If they can tide the virus over, then the delinquent loans will disappear,” said Zhang Shuaishuai, a banking analyst at China International Capital Corp.

But that’s far from a given. S&P analysts see scope for caution, saying last week that it may take years for the industry to revert to normal standards for recognizing NPLs and that some banks may see their long-term health suffer as a result.

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Bank of America warns negative U.S. rates could hurt operations

Bank of America Corp cited the possibility of negative interest rates in the United States as a business risk for the first time in a filing on Wednesday.

The unconventional policy measure has been a talking point for President Donald Trump, who has critiqued the Federal Reserve for raising interest rates earlier in his presidency.

Historically low interest rates since the 2008 financial crisis have limited how much banks can make from their lending services. After years of small increases, the Federal Reserve cut interest rates three times last year, crimping bank earnings and leading Bank of America to give a downbeat lending revenue outlook for 2020.

“A move to negative interest rates in the U.S., could result in lower revenue, and maintain or increase pressure on net-interest income, which may adversely affect our results of operations,” the bank said in a filing.


Some countries have recently resorted to negative interest rates, which charge banks interest on deposits to get them to lend more in a bid to jumpstart the economy. Switzerland, Denmark, Sweden and Japan have allowed rates to fall to slightly below zero.

U.S. Federal Reserve Chair Jerome Powell has signaled that the U.S. monetary authority will keep rates above zero, telling Congress that negative interest rates are not appropriate for a U.S. economy with ongoing growth, a strong labor market and steady inflation.

A Bank Of America Corp. Bank Branch Ahead Of Earnings Figures
Bank of America Corp.




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U.K. Inflation Accelerates to Its Fastest Pace in Six Months

U.K. inflation picked up for the first time in six months, boosted by the cost of energy, motor fuel and air fares.

Consumer prices rose a stronger-than-forecast 1.8% in January from a year earlier, the fastest since July, the Office for National Statistics said Wednesday. Core inflation picked up to 1.6%. The pound erased a modest decline and was up 0.1% to $1.3014 as of 9:35 a.m. London time.


But the acceleration is likely to prove temporary, with inflation expected to fall back in the second quarter and remain below the Bank of England’s 2% target for the next two years.

The benign inflation outlook would make it easier for the BOE to cut interest rates should the economy wobble amid critical trade talks with the European Union, though policy makers are expected to refrain for now. That’s because the labor market remains tight and confidence has improved since Prime Minister Boris Johnson’s election victory in December.

January’s inflation boost from gas and electricity was largely due to a sharp drop a year earlier when the industry regulator introduced its price cap. There was also upward pressure from auto fuel, which rose almost 2%, while air fares fell less than a year ago.


Other figures showed pipeline pressures remained relatively subdued, with output prices rising just 1.1% year-on-year.House prices rose an annual 2.2% in December, their strongest increase in more than a year, and surveys suggest the post-election revival in the housing market gathered pace in January. Prices in London, which have borne the brunt of Brexit uncertainty, posted the fastest growth since October 2017.

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Wall Street Slips After Jobs Report

◊ Stock Market News Jobs Report ◊


Wall Street pulled back from record levels on Friday, as investors assessed the U.S. employment report that showed jobs growth accelerated in January but included a downward revision to some previous numbers.

Nonfarm payrolls increased by 225,000 jobs last month, the Labor Department’s data showed, much higher than 160,000 jobs additions expected by economists polled by Reuters. However, the economy created 514,000 fewer jobs between April 2018 and March 2019 than originally estimated, suggesting job growth could significantly slowdown this year.

“Where the market is right now, it likes to see an economy that’s not too hot and not too cold because a much stronger economy suggests higher interest rates,” said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

“When you get the kind of upward move in markets, it’s not surprising to see people wanting to go into the weekend quite as long.”

Technology stocks, which outperformed broader markets this week, slipped 0.7%, weighing the most on the S&P 500. A strong four-day rally this week has put the benchmark index on pace for its best week in eight months as investors took comfort from China’s efforts to limit the economic damage from the coronavirus outbreak.

The new infections in mainland China on Thursday were down from Wednesday and Tuesday’s figures, but experts warned it was too early to identify a trend.

At 9:48 a.m. ET, the Dow Jones Industrial Average was down 0.58% at 29,208.83. The S&P 500 fell 0.44% to 3,331.09 and the Nasdaq Composite dropped 0.56% to 9,519.02.

More than 300 S&P 500 companies have reported fourth-quarter results so far, of which about 70% have topped earnings estimates, according to IBES data from Refinitiv.

Take-Two Interactive Software Inc (O:TTWO) slumped 10.6% after the videogame publisher missed estimates for quarterly adjusted revenue. AbbVie Inc gained 4.3% after the drugmaker forecast 2020 earnings above analysts’ expectations.

Uber Technologies Inc (N:UBER) shares gained about 5.7% after the ride-hailing company moved forward by a year its target to achieve a measure of profitability to the fourth quarter of 2020. Declining issues outnumbered advancers for a 2.51-to-1 ratio on the NYSE and a 2.64-to-1 ratio on the Nasdaq.

The S&P index recorded 18 new 52-week highs and one new low, while the Nasdaq recorded 31 new highs and 31 new lows.

Amazon Says It Will Create 15,000 Jobs In Bellevue

StockMarketNews.Today — Amazon said it expects to bring the 15,000 jobs to Bellevue over the next few years. More than 2,000 employees currently work in Bellevue, and the company has about 700 job openings in the city.

The company opened its first office building in Bellevue in 2017. The city is also where Amazon got its start. Amazon CEO Jeff Bezos founded the company in 1994 out of a 1,540-square-foot house in West Bellevue.

Amazon, which is headquartered in nearby Seattle, has continued to expand there despite rising tensions with local officials. Last month, the Seattle City Council council passed a bill that establishes new restrictions on corporate donations in local elections, which serves as a blow to Amazon, after it donated a record $1.5 million into Seattle’s city council races in 2019. Additionally, Seattle city council member Kshama Sawant has recently reignited efforts to enact a “head tax” on the city’s largest companies, such as Amazon, with the goal of using it to fight Seattle’s housing crisis.

The company has been growing its overall headcount and footprint. In its annual filing submitted last week, Amazon disclosed that it now has 798,000 workers across the globe, which is a 23% increase from the year-ago period. On the company’s fourth-quarter earnings call, Amazon CFO Brian Olsavsky said some of the hires were delivery workers, as it builds out one-day and same-day delivery for Prime subscribers.

Amazon is also growing in New York, where it recently signed a deal to lease more than 335,000 square feet of office space in Hudson Yards and expects to hire more than 1,500 employees. The move comes after Amazon abandoned its efforts to build a second headquarters in New York’s Long Island City neighborhood.

The company is also building out operations in northern Virginia, where it’s building its second headquarters, dubbed HQ2. So far, Amazon has hired 400 employees to work out of leased offices in Crystal City, Virginia. It also plans to bring 5,000 jobs to Nashville, Tennessee, where it expects to build two towers.

◊ How To Make Money Online◊

Internet offers many opportunities to make a lot of money. Whether you’re looking to make some fast cash, or you’re after long-term, more sustainable income-producing results, there are certainly ways you can make money online today. The truth is that making money online isn’t as difficsult as most make it out to seem.


However, if you’re looking for realistic ways to make money now, then it really truly does boil down to 11 paths you can take towards profit. Some will provide you with immediate results, helping you to address your basic monthly necessities, while others have the potential to transform your life by revolutionizing your finances in the long term…

1. Make Money as a Life Coach


Money Invested: $45 | Time Invested: 110 Hours | Money Earned (30 days): $979

How To Make Money as Life Coach: Life coaching is the process of helping people identify and achieve personal goals through developing skills and attitudes that lead to self-empowerment. Life coaching general deals with issues such as work-life balance and career changes, and often occurs outside the workplace setting. Learn More …

2.  Make Money With Affiliate Programs


Money Invested: $1,300 | Time Invested: 72 Hours | Money Earned (30 days): $7,742

How To Make Money In Affiliate Marketing: Affiliate marketing is the process of earning a commission by promoting other people’s (or company’s) products. You find a product you like, promote it to others and earn a piece of the profit for each sale that you make. Learn More …

3. Make Extra Money Online Simply By Sharing Your Opinions


Money Invested: $1 | Time Invested: 46 Hours | Money Earned (30 days): $429

How To Make Money by Sharing Your Opinion: A Review ( Opinion ) is an evaluation of a publication, service, or company such as a movie, video game, musical composition, book; a piece of hardware like a car, home appliance, or computer; or an event or performance, such as a live music concert, play, musical theater show, dance show, or art exhibition. Learn More …

4. Make Money With an Online Drop Shipping Business


Money Invested: $75 | Time Invested: 144 Hours | Money Earned (30 days): $2,915

How To Make Money With an Online Drop Shipping Business: Drop shipping is a business model where you send your customers’ orders to a manufacturer or wholesaler, and they send the products directly to your customer. Learn More …

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Stock Market: Economic Calendar – Top 5 Things to Watch This Week

Start Trading Now

Stock Market — Here’s what you need to know to start your week.

Coronavirus outbreak
Market participants are keeping a wary eye on developments surrounding the coronavirus outbreak which has infected more than 2,000 people, the vast majority in China where 56 people have died. The virus has also spread to the U.S., Thailand, South Korea, Japan, Australia, France and Canada.

With stocks close to all-time highs investors are fearful that the newly identified virus could develop into something worse, like the 2003 SARS epidemic.

“Markets hate uncertainty and the virus has been enough to inject uncertainty in the markets,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York.

The World Health Organization has stopped short of calling the outbreak a global health emergency, but some health experts question whether China can continue to contain the epidemic.

More FAANG results
While last week’s Q4 earnings from Netflix (NASDAQ:NFLX) underwhelmed Wall Street, analyst hopes are still high for the other FAANGs – Facebook (NASDAQ:FB), Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Google parent Alphabet (NASDAQ:GOOGL) – ahead of their financial results for the quarter.

The FAANG group of U.S. tech stocks have been the biggest drivers of the bull market, with recent gains among most of the group far outstripping the broader market.

Facebook is expected to post earnings growth of 6.2% when it reports on Wednesday, while Apple earnings, due a day earlier, are forecast to have grown 8.7%. Amazon has warned that increased investment in its package delivery business in the last quarter will weigh on earnings, but it sees quarterly revenues up 18.7% when it reports on Thursday.

In comparison, the S&P 500’s fourth-quarter earnings are expected to decline 0.8% and revenue is seen rising 4.4%, according the latest estimates compiled by Refinitiv.

Fed meeting
The Fed will almost certainly keep monetary policy on hold on Wednesday as policymakers continue to assess how the three rate cuts from 2019 are percolating through the economy.

“With no new forecasts being released at this meeting it will be the tone of Jerome Powell’s press conference and the actual vote that is likely to be of most interest for markets,” said James Knightley, chief international economist at ING.

“We would also expect to hear Jerome Powell retaining his cautiously upbeat language, particularly given the positive conclusion to U.S.-China trade talks. He is likely to reiterate that we will need to see a “material change” for the Fed to consider a policy shift.”

Bank of England meeting
The BoE is to deliver its final monetary policy decision before Britain exits the EU on Jan 31 on Thursday and the meeting will be Mark Carney’s last as central bank governor.

The question is whether the BoE will join central bank peers in cutting interest rates. Economic growth and inflation took a hit from three-and-a-half years of Brexit uncertainty so a recent string of dismal data and comments by BoE officials, including Carney, that more economic stimulus might be needed saw rate cut expectations surge.

But economic data last week pointed to a post-election boost, leading markets to pare back expectations for a cut.

The future path of the British pound, currently trading at around $1.31, in the middle of its trading range so far in 2020 – hangs on the BoE’s decision and forecasts for whether the economy will find more momentum after Brexit.

GDP figures
The U.S. is to release advance fourth quarter GDP figures on Thursday, with analysts forecasting growth of 2.1%. U.S. President Donald Trump might repeat his argument that if it were not for Fed policy tightening, growth would be closer to 4%.

The Euro Zone is to release GDP data on Friday, which is forecast to show the economy expanded 0.2% from the previous three months, backing up the European Central Bank’s view of “ongoing, but moderate growth.”

⇑⇓ Today’s Stock Market Quotes ⇓⇑

Stock Market: This May Be The Most Important Week So Far In 2020

Stock Market — The week ahead is arguably the most important here at the start of 2020. The Federal Reserve and the Bank of England meet. The U.S. and the eurozone report initial estimates of Q4 19 GDP. The eurozone also reports its preliminary estimate of January CPI. China returns from the extended Lunar New Year celebration and reports its official PMI. Japan will report December retail sales and industrial production. These data points will provide insight into the state of the recovery from the October sales tax and typhoon.

Fears of the spread of a new virus from China and the potential economic impact weighed on risk-taking appetites last week. It is still early days, but the contagion rate appears to be tracking something close to SARS, which ended up slashing Chinese growth by two percentage points. China and Hong Kong equity markets were hit the hardest (3%+), the S&P 500’s decline of a little more than 1%, was only the fourth weekly loss but the largest since the end of Q3 ’19.

China reports the newest PMI readings on January 30. The impact of the coronavirus may not be picked up entirely in the data, which will not offer a clean read on the economy due to the Lunar New Year. To the extent that the virus impact is detected, it will likely hit services harder that manufactured goods in the first instance. That said, January manufacturing and non-manufacturing PMI are expected to have softened a little (50.2 and 53.5, respectively in December). The risk is that the economic disruption will offset the stimulus recently provided. The magnitude of the commitment to buy U.S. goods was already a stretch, according to some estimates, and weaker Chinese growth could provide another hurdle.

It has been widely reported that China committed to buying $200 bln more U.S. goods than the $128 bln purchased in 2017, the last year before the tariffs. However, last year, the U.S. exports to China were about $98 bln. So, compared with 2019, China has committed to buying $230 bln more U.S. goods. China will likely import a bit more than $2 trillion of goods and services this year. The political agreement appears to secure for the U.S. a little more than 15% of that market.

With a press conference after every FOMC meeting, and given Powell’s perceived communication challenges, it is difficult to say that the January 29 meeting is a non-event. Still, for all practical purposes, it is. There is scope for a small technical adjustment. The Fed pays 1.55% interest on both required and excess reserves. It could raise this by five basis points to ensure the fed funds rate remains within the 1.50%-1.75% target range. Many who think the Fed’s bill buying and repo operations represent an easing of monetary policy (as in QE), may argue that the Fed is tightening. However, most will likely conclude that it would be a technical adjustment and not a change in monetary policy proper.

The forecasts will not be updated until March, and the economy has not materially deviated from Fed expectations. Last year, some media reports played up the two persistent dissents against the series of rate cuts and argued Powell was losing control. However, this does not seem to be the case, and indeed a clear consensus has emerged. At the December meeting, 14 of the 17 officials thought no rate change would be needed this year.

Near-term downside risks have lessened. The U.S.-China trade deal may not deserve the embellished official descriptions, but an escalation in the coming months seems less likely than even a couple of months ago. The UK will leave the EU at the end of January for an 11-month standstill arrangement where nothing changes while a new trade deal is negotiated. The risk of a disruptive no-deal exit at the end of the year remains, but it is not yet pressing. Nevertheless, the implied yield of the December 2020 fed funds futures contract is near 1.30% compared with the current average of 1.55%, suggesting a 25 bp Fed cut has been discounted.

The Bank of England is a different story. Two members of the Monetary Policy Committee have dissented at the past couple of meetings in favor of an immediate rate cut. Two other members have indicated if the data did not improve, they too could support a rate reduction. BOE Governor Carney also sounded more dovish in recent comments. The January 30 BOE meeting will be the last Carney chairs. Andrew Baily will take the reins before the next meeting on March 26.

The official comments and the disappointing economic data has spurred a shift in market expectations. On January 10, the derivatives market implied a little less than a one-in-four chance of a rate cut on January 30. By January 17, the odds jumped to almost three-in-four. But sentiment swung back last week, and the odds narrowed to a little less than 50/50. It is a close call, and on balance, the resilience of the labor market, the recovery in business confidence, and the uptick in the PMI may keep the BOE on hold a bit longer. If this is indeed the case, sterling may pop higher, though ideas that lower rates can still be delivered later in H1 may limit the upside.

Quarterly GDP numbers often grab the headline, but for many investors, the report is a culmination of other high-frequency data with some variance. Moreover, GDP data is backward-looking. It is then more a favorite of economists than market participants. That said, the mixed signals of the U.S. economy make this GDP call particularly tricky, and the first estimate is subject to statistically significant revisions, often stemming from trade and inventories. The NY Fed’s GDP tracker (as of January 17) pointed to a sub-par 1.2% annualized pace. The Atlanta Fed’s model pointed to a 1.8% pace. The Bloomberg survey has a median forecast of 2.1%.

The composition of U.S. growth may have also changed. Consumption may have slowed from the 3.2% annualized pace in Q3. Residential investment appears to have risen, and trade also may have made a net positive contribution. The headline and core deflator are likely to be mostly steady. The Federal Reserve will look through just about any weakness in Q4 GDP and will make allowances for the production cuts at Boeing Co (NYSE:BA) in Q1 20. The case of a rate cut is based on ideas that record-long U.S. expansion is fragile and will have increasing difficulty coping with shocks. The lack of pick-up in early Q2 will leave the Fed with the same choice as last year. With price pressures subdued, another insurance policy can be taken out to boost the chances that the expansion can be extended.

Eurozone Q4 GDP seems easier to forecast. Growth has been relatively steady, with quarterly growth averaging about 0.3% for the past four quarters and 0.2% for the previous two. The year-over-year pace has been about 1.2% over the same period. It may not be very inspiring, but it is steady, and growth potential is probably only a little higher at around 1.5% or so. Market participants appear to be more confident that the ECB is on hold for the duration that it is of the Fed. The market sees only about a one-in-five chance of a rate cut by the ECB this year.

Perhaps the most challenging data point for investors to make sense of will be the initial estimate of the eurozone’s January consumer inflation. Prices fall in January. Last January, prices fell by 1%. That means that if prices fell by 0.9% this month, as economists forecast, the year-over-year rate will tick up. Indeed, the year-over-year rate is expected to rise to 1.4%. It would be the highest since last April. This is one reason why claims of Japanification of Europe are too simplistic: European inflation is nearly twice that of Japan’s. However, while we anticipate a base-effect rise in European CPI, the comparisons are not as friendly, and the true signal, as likely to be reflected in the core rate that may ease to 1.2% after being stuck at 1.3% in November and December.

Lastly, we turn to Japan. The issue at hand is how quickly it can rebound from the controversial sales tax increase and the typhoons. The most direct report will be retail sales. Recall the sequence of events. Anticipating the tax increase in October, consumers brought forward purchases, and August retail sales rose by 4.6% and then 7.2%, before plummeting 14.2% in October. They snapped back 4.5% in November and probably a little more than 1% in December.

Industrial output fell by 4.5% in October and another 1% in November. A small rise of around 0.7% is expected in December. Yet, in terms of the yen, these macro considerations seem to be of secondary importance. The heightened anxiety over the new coronavirus expressed through the sale of risk-off assets, and the unwinding of carry-trades and those speculators knowingly or unknowingly riding this wave is the primary driver now as the dollar’s advance was stalling around JPY110.25.

The coronavirus is an economic and financial shock. The extent of that shock still needs to be assessed but it could provide the spark for an arguably long-overdue adjustment in the capital markets. Investors may be risk-averse until there is greater transparency about the contagion rate and health risks. It is humbling to appreciate that despite the advances in science and medicine, some 80k Americans died in 2017-2018 from influenza, the highest toll in 40 years. The World Health Organization estimates that the annual flu epidemic kills between around 250k-500k people globally each year.


◊ Plus500 Review 2020 ◊


Best Online Trading Platform For Beginners And Professional Traders. Shares, Indices, Forex and Cryptocurrencies. Start Trading Now or Try a FREE Demo Account.

Plus500 is a streamlined broker that focuses on trading in a wide range of financial markets with relatively low spreads and no commissions but without offering many extra services. Plus500 has been in the forex and CFD business since 2008. They are registered in the U.K. and licensed by the Financial Conduct Authority (FCA).

The company offers access to a comprehensive product line including forex, stock indexes, equities, commoditiescryptocurrencies, ETFs and options. Plus500 is the first broker to introduce a bitcoin CFD in 2013. The company does not charge commissions on any of its trades.

All costs are contained within the spread for each of more than 2,000 trading instruments offered on Plus500’s WebTrader platformPlus500 Ltd. (PLUS.L) is a publicly traded company on the AIM section of the London Stock Exchange since 2013 with a £1.73 billion ($2.25 billion) market capitalization and clients in more than 50 countries around the world. Plus500 offers access to more than 2,000 trading instruments.


Trust … the company is registered with the Financial Conduct Authority (FCA), CySEC, ASIC, FSCA, FMA, MAS, and the ISA, which provides good accountability and visibility. The company is required to take steps to ensure client funds are not comingled with corporate funds – ensuring that client money and assets are protected in the unlikely event that Plus500 becomes insolvent – by holding those funds in segregated accounts at regulated banks.

If Plus500 defaults, any shortfall of funds of up to £50,000 may be compensated for under the Financial Services Compensation Scheme (FSCS). If the custodian bank holding client funds goes into liquidation, any shortfall of funds of up to £85,000 may be compensated for under the FSCS.

Plus500 also offers Negative Balance Protection, ensuring that clients cannot lose more than they have put into their account. Guaranteed stop losses can be used on some instruments depending on market conditions but they are subject to a wider spread.

The company does not charge commissions on any of its trades. All costs are contained within the spread for each of more than 2,000 trading instruments offered on Plus500’s WebTrader platform. Large volume traders do not get a trading discount at Plus500 and the spread is the same whether you trade one lot or 1,000 lots.


There are no charges for normal withdrawals or terminating an account. However, inactivity fees kick in after an account has been idle for three months. Beginning traders can open an account with as little as £100.

Traders can qualify for a “professional” account, which offers a higher level of maximum leverage, but the costs are the same. Investors with a professional account may increase their maximum leverage ten-fold, from 1:30 to 1:300.Spreads at Plus500 were some of the lowest in the market.

Plus500 also offers access to options trading on many markets. These are very similar to plain call and put options traded on exchanges, but they are not standardized which means that the option premium can be customized for your risk tolerance and strategy objectives.


Stock Market: World Economy Going Through Longest Period of Falling Trade Since 2009

Stock Market — The downturn in global trade dragged on at the end of last year, marking the longest period of contraction since the end of the financial crisis.

The volume of goods trade dropped 0.6 per cent in November compared to the previous month, and was down 1.1 per cent compared to the same month in 2018, according to a closely watched world trade monitor from the Netherlands Bureau for Economic Policy Analysis (CPB).

November marked the sixth consecutive month of year-on-year contraction, the longest period of falling trade since 2009 and a sharp reversal from the 3.4 per cent expansion in November 2018.

The rate of contraction slowed in November, however, down from a 2 per cent pace in October, which was the steepest fall in a decade.

The annual contraction in trade- which is the value of exports and imports adjusted for price changes — was geographically broad-based with the eurozone, emerging Asia, the US and Latin America all reporting falling trade volumes.

However, trade was up over the previous month in emerging Asia, while the downturn became more severe in the eurozone where trade volumes dropped 1.7 per cent compared to October.

The data confirm surveys released earlier this month that showed a deterioration in global trade running until the end of the year. The exports order component of the JPMorgan Global purchasing manager index remained in negative territory in November and December, although up from September’s reading.

“International trade remains the main drag on efforts to lift growth further, so any moves that reduce tensions and barriers on this front will be especially beneficial.” Olya Borichevska, from Global Economic Research at JPMorgan.

Economists expect trade data to improve in early 2020, reflecting the signing of the US-China phase one trade deal earlier this month, as well as improving conditions in emerging economies such as Turkey. But a strong recovery is not on the cards yet.

“We think a recovery in world trade will be very modest, despite the pause in US-China hostilities” said Adam Slater, chief economist at Oxford Economics.

“World trade growth at this pace is less than half its long-term average.”

How To Make Money Online{ 2020 }

Internet offers many opportunities to make a lot of money. Whether you’re looking to make some fast cash, or you’re after long-term, more sustainable income-producing results, there are certainly ways you can make money online today. The truth is that making money online isn’t as difficsult as most make it out to seem.

However, if you’re looking for realistic ways to make money now, then it really truly does boil down to 11 paths you can take towards profit. Some will provide you with immediate results, helping you to address your basic monthly necessities, while others have the potential to transform your life by revolutionizing your finances in the long term…

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  • 1. Make Money as a Life Coach


Money Invested: $45 | Time Invested: 110 Hours | Money Earned (30 days): $879

How To Make Money as Life Coach: Life coaching is the process of helping people identify and achieve personal goals through developing skills and attitudes that lead to self-empowerment. Life coaching general deals with issues such as work-life balance and career changes, and often occurs outside the workplace setting. Learn More …


Money Invested: $1,300 | Time Invested: 72 Hours | Money Earned (30 days): $7,742

How To Make Money In Affiliate Marketing: Affiliate marketing is the process of earning a commission by promoting other people’s (or company’s) products. You find a product you like, promote it to others and earn a piece of the profit for each sale that you make. Learn More …

  • 3. Make Extra Money Online Simply By Sharing Your Opinions


Money Invested: $1 | Time Invested: 46 Hours | Money Earned (30 days): $329

How To Make Money by Sharing Your Opinion: A Review ( Opinion ) is an evaluation of a publication, service, or company such as a movie, video game, musical composition, book; a piece of hardware like a car, home appliance, or computer; or an event or performance, such as a live music concert, play, musical theater show, dance show, or art exhibition. Learn More …

  • 4. Make Money With an Online Drop Shipping Business


Money Invested: $75 | Time Invested: 144 Hours | Money Earned (30 days): $1,915

How To Make Money With an Online Drop Shipping Business: Drop shipping is a business model where you send your customers’ orders to a manufacturer or wholesaler, and they send the products directly to your customer. Learn More …

  • 5. Write an Ebook and sell it on Amazon


Money Invested: $55 | Time Invested: 108 Hours | Money Earned (30 days): $973

How to Make Money Selling Ebooks Online: Do you want to learn how to make an ebook from beginning to end?… Writing ebooks is one of the easiest way to earn money. You work on your own time, and when you finish the book – you will make money from it over and over again…for a very long time!. Learn More …

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Money Invested: $25 | Time Invested: 52 Hours | Money Earned (30 days): $494

How to Make Money on Twitter: Twitter is an American online microblogging and social networking service on which users post and interact with messages known as “tweets”. Selling advertising, sponsored links, and affiliate marketing. Here are a few programs that can help you make money on Twitter. Learn More …


Money Invested: $55 | Time Invested: 110 Hours | Money Earned (30 days): $1,514

How To Make Money Selling Domain Names: Domain name is like a land on the Web. You can use domains in a variety of ways to make money. Domains increase value over time, especially if they have some commercial value. You can buy a domain name at low price and then sell it high priceLearn More …


Money Invested: $300 | Time Invested: 72 Hours | Money Earned (30 days): $3,177

How To Make Money in Stock Trading: Investing in the stock market can be a great way to have your money make money… Stock trading is not a risk-free activity, and some losses are inevitable. However, with substantial research and investments in the right companies, stock trading can potentially be very profitable. Learn More …

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Money Invested: $1 | Time Invested: 74 Hours | Money Earned (30 days): $374

How To Earn Money Selling Photos Online: Who wouldn’t want to earn money by selling their photos online? … Did you know thousands of photographers are making hundreds even thousands of dollars every day just by selling their photos online?… In fact every month millions of photos are bought online which is used for websites, magazines, blogs, print ads, marketing materials and many more. Learn More …


Money Invested: $1 | Time Invested: 60 Hours | Money Earned (30 days): $245

How To Make Money on Youtube: You’ve probably heard stories about regular people earning money on YouTube and thought, “Hey, I can do this too!”. Earning with YouTube is easy, but making big money with the platform can be a challenge. Learn More …

  • 11. Make Money Testing Apps


Money Invested: $20 | Time Invested: 44 Hours | Money Earned (30 days): $197

How To Make Money Testing Apps: Testing Apps is a great way to earn extra money but it won’t make you rich. The number of opportunities you receive will depend on a number of factors, such as your demographics and your quality rating. Learn More …

◊ Plus500 Review 2020 ◊


Best Online Trading Platform For Beginners And Professional Traders. Shares, Indices, Forex and Cryptocurrencies. Start Trading Now or Try a FREE Demo Account.

Plus500 is a streamlined broker that focuses on trading in a wide range of financial markets with relatively low spreads and no commissions but without offering many extra services. Plus500 has been in the forex and CFD business since 2008. They are registered in the U.K. and licensed by the Financial Conduct Authority (FCA).

The company offers access to a comprehensive product line including forex, stock indexes, equities, commoditiescryptocurrencies, ETFs and options. Plus500 is the first broker to introduce a bitcoin CFD in 2013. The company does not charge commissions on any of its trades.

All costs are contained within the spread for each of more than 2,000 trading instruments offered on Plus500’s WebTrader platformPlus500 Ltd. (PLUS.L) is a publicly traded company on the AIM section of the London Stock Exchange since 2013 with a £1.73 billion ($2.25 billion) market capitalization and clients in more than 50 countries around the world. Plus500 offers access to more than 2,000 trading instruments.


Trust … the company is registered with the Financial Conduct Authority (FCA), CySEC, ASIC, FSCA, FMA, MAS, and the ISA, which provides good accountability and visibility. The company is required to take steps to ensure client funds are not comingled with corporate funds – ensuring that client money and assets are protected in the unlikely event that Plus500 becomes insolvent – by holding those funds in segregated accounts at regulated banks.

If Plus500 defaults, any shortfall of funds of up to £50,000 may be compensated for under the Financial Services Compensation Scheme (FSCS). If the custodian bank holding client funds goes into liquidation, any shortfall of funds of up to £85,000 may be compensated for under the FSCS.


Plus500 also offers Negative Balance Protection, ensuring that clients cannot lose more than they have put into their account. Guaranteed stop losses can be used on some instruments depending on market conditions but they are subject to a wider spread.

The company does not charge commissions on any of its trades. All costs are contained within the spread for each of more than 2,000 trading instruments offered on Plus500’s WebTrader platform. Large volume traders do not get a trading discount at Plus500 and the spread is the same whether you trade one lot or 1,000 lots.

There are no charges for normal withdrawals or terminating an account. However, inactivity fees kick in after an account has been idle for three months. Beginning traders can open an account with as little as £100.

Traders can qualify for a “professional” account, which offers a higher level of maximum leverage, but the costs are the same. Investors with a professional account may increase their maximum leverage ten-fold, from 1:30 to 1:300.Spreads at Plus500 were some of the lowest in the market.

Plus500 also offers access to options trading on many markets. These are very similar to plain call and put options traded on exchanges, but they are not standardized which means that the option premium can be customized for your risk tolerance and strategy objectives.



U.S. Adds 202,000 Private Sector Jobs in December

StockMarketNews.Today — U.S. private employers added a far larger-than-forecast 202,000 jobs in December, according to a report by payrolls processor ADP on Wednesday. Economists had expected the report to show a gain of 160,000 jobs.

November’s figure was revised to 124,000 from the 67,000 initially reported.

“As 2019 came to a close, we saw expanded payrolls in December,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “The service providers posted the largest gain since April,driven mainly by professional and business services. Job creation was strong across companies of all sizes, led predominantly by midsized companies.”

Mark Zandi, chief economist of Moody’s Analytics, said, “Looking through the monthly vagaries of the data, job gains continue to moderate. Manufacturers, energy producers and small companies have been shedding jobs. Unemployment is low, but will begin to rise if job growth slows much further.”

The ADP numbers come ahead of the Labor Department’s nonfarm payrolls report for December on Friday, which includes both public and private-sector employment.

Economists expect that report to show a gain of 164,000 jobs, while the unemployment rate is forecast to hold steady at 3.5%.

Today’s Stock Market News { Wednesday, 8 January, 2020 }

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StockMarketNews.Today — Iran attack on US forces sends oil rising. Oil prices and global stock markets stabilised after an initial jolt of volatility in the hours after an Iranian missile strike against American forces in Iraq significantly escalated tensions in the Middle East.

President Trump is due to make a statement in the coming hours, but tweeted “all is well!” overnight, while Iran’s supreme leader said the attack was a “slap” in the face for the US but fell short of making further threats of escalation.

Brent crude was just under 1 per cent higher at $69 a barrel in early London trading, having calmed from an earlier spike to as high as $71.75 in the Asian session as investors gauged the consequences of the Iranian action and the likelihood of a US response.

S&P 500 equity futures initially slumped 1.6 per cent but were recently down 0.2 per cent. Declines in European markets were also measured, with the composite Stoxx 600 index down 0.4 per cent, and similar falls for the major bourses across the continent.

Shares in state oil company Saudi Aramco hit a new low of 34 riyal, the lowest level since the group floated on Saudi Arabia’s stock market last month, as regional markets fell.

Markets across the world were jolted after Tehran’s Revolutionary Guard said it fired “tens of rockets” at facilities in Iraq including the Ain Assad base, which hosts US troops. The attack was retaliation for a US drone strike that killed Qassem Soleimani, head of Iran’s elite Quds force responsible for overseas military operations, and marked a serious escalation in the confrontation between Iran and the US.

However, investors were reassured by an apparent absence of US casualties and the measured tone of the official responses. President Donald Trump said on Twitter that “assessment of casualties & damages [are] taking place now” and “So far, so good!” following the attack. Mohammad Javad Zarif, Iran’s foreign minister, tweeted that Iran does “not seek escalation or war, but will defend ourselves against any aggression”.

“We knew some kind of retaliation was going to happen . . . so this is not overly shocking,” said Jim Paulsen, chief investment officer at Leuthold Group. “I hate to say it but there are no casualties as of yet, so right now I would say the markets won’t be facing too much selling pressure.”

Market Volatility Index

Investors had sought safer segments of the markets in response to news of the missile attack. The price of gold, seen as a haven during times of uncertainty, climbed to a near-seven-year high, rising 2.2 per cent to $1,600 per troy ounce. In the European morning it was trading back at $1,585, a gain of 0.7 per cent.

The yield on 10-year US treasuries was down 3 basis points at 1.7899 per cent after earlier hitting a one-month low, while the Japanese yen was flat versus the dollar after rising early in the day.

Japan’s Topix stock index shed 1.4 per cent, while Hong Kong’s Hang Seng slipped 0.8 per cent. China’s CSI 300 of Shanghai- and Shenzhen-listed stocks was down 1.2 per cent.

“The major risk is that we continue to see a tit-for-tat pattern which escalates into a greater conflict,” said Chris Gaffney, president for world markets at TIAA Bank. “I expect [markets] to recover quickly from any knee-jerk selling as long as there are no additional military actions.”

But some analysts warned that any further escalation could mean Brent crude prices would keep pushing higher, to $75 per barrel.

“Depending on any potential further actions by Iran, which is likely, or a likely retaliation by the US, the price may hover around these levels or hike further to $80 a barrel and beyond,” said Iman Nasseri, managing director for the Middle East with energy consultancy FGE.

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Best Stock Market Books For Beginners {2020} Amazon

#1 – The Intelligent Investor. (Revised Edition)

This classic text is annotated to update Graham’s timeless wisdom for today’s market conditions… The greatest investment advisor of the twentieth century, Benjamin Graham, taught and inspired people worldwide. Graham’s philosophy of “value investing” — which shields investors from substantial error and teaches them to develop long-term strategies — has made The Intelligent Investor the stock market bible ever since its original publication in 1949.

Over the years, market developments have proven the wisdom of Graham’s strategies. While preserving the integrity of Graham’s original text, this revised edition includes updated commentary by noted financial journalist Jason Zweig, whose perspective incorporates the realities of today’s market, draws parallels between Graham’s examples and today’s financial headlines, and gives readers a more thorough understanding of how to apply Graham’s principles.

Vital and indispensable, this HarperBusiness Essentials edition of The Intelligent Investor is the most important book you will ever read on how to reach your financial goals.

#2 – Stock Investing For Dummies (Business & Personal Finance)

Grow your stock investments in today’s changing environment. Updated with new and revised material to reflect the current market, this new edition of Stock Investing For Dummies gives you proven strategies for selecting and managing profitable investments. no matter what the conditions. You’ll find out how to navigate the new economic landscape and choose the right stock for different situations—with real-world examples that show you how to maximize your portfolio.

The economic and global events affecting stock investors have been dramatic and present new challenges and opportunities for investors and money managers at every level. With the help of this guide, you’ll quickly and easily navigate an ever-changing stock market with plain-English tips and information on ETFs, new rules, exchanges, and investment vehicles, as well as the latest information on the European debt crisis.

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Stock Investing For Dummies is essential reading for anyone looking for trusted, comprehensive guidance to ensure their investments grow.

#3 – Encyclopedia of Chart Patterns

In this revised and expanded second edition of the bestselling Encyclopedia of Chart Patterns, Thomas Bulkowski updates the classic with new performance statistics for both bull and bear markets and 23 new patterns, including a second section devoted to ten event patterns. Bulkowski tells you how to trade the significant events — such as quarterly earnings announcements, retail sales, stock upgrades and downgrades — that shape today?s trading and uses statistics to back up his approach. This comprehensive new edition is a must-have reference if you’re a technical investor or trader. Place your order today.
“The most complete reference to chart patterns available. It goes where no one has gone before. Bulkowski gives hard data on how good and bad the patterns are. A must-read for anyone that’s ever looked at a chart and wondered what was happening.”
— Larry Williams, trader and author of Long-Term Secrets to Short-Term Trading.

#4 – How to Make Money in Stocks

Anyone can learn to invest wisely with this bestselling investment system!… Through every type of market, William J. O’Neil’s national bestseller, How to Make Money in Stocks, has shown over 2 million investors the secrets to building wealth. O’Neil’s powerful CAN SLIM® Investing System―a proven 7-step process for minimizing risk and maximizing gains―has influenced generations of investors.

Based on a major study of market winners from 1880 to 2009, this expanded edition gives you:

>Proven techniques for finding winning stocks before they make big price gains
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“I dedicated the 2004 Stock Trader’s Almanac to Bill O’Neil: ‘His foresight, innovation, and disciplined approach to stock market investing will influence investors and traders for generations to come.’”
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“Investor’s Business Daily has provided a quarter-century of great financial journalism and investing strategies.”
―David Callaway, editor-in-chief, MarketWatch

“How to Make Money in Stocks is a classic. Any investor serious about making money in the market ought to read it.”
―Larry Kudlow, host, CNBC’s “The Kudlow Report”.

#5 – How to Day Trade for a Living

Very few careers can offer you the freedom, flexibility and income that day trading does. As a day trader, you can live and work anywhere in the world. You can decide when to work and when not to work. You only answer to yourself. That is the life of the successful day trader. Many people aspire to it, but very few succeed. Day trading is not gambling or an online poker game. To be successful at day trading you need the right tools and you need to be motivated, to work hard, and to persevere… This book is definitely NOT a difficult, technical, hard to understand, complicated and complex guide to the stock market. It’s concise. It’s practical. It’s written for everyone. You can learn how to beat Wall Street at its own game.

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#1 – The Book on Making Money

After skipping college, Steve Oliverez worked a series of low-paying jobs before setting a remarkable goal for himself – to double his income every year. In The Book On Making Money, he reveals what he learned while successfully hitting this goal for seven years in a row, growing his annual income to more than $1 million. Walking readers through the steps he took to reach his goal, he shows how they can apply the same techniques to greatly increase their own income, whether they work for someone else or run their own business. Oliverez spells out his disagreements with the traditional wisdom that tells young adults to go to school, get good grades and find a safe, steady job – advice that has left many Americans with tens or hundreds of thousands of dollars in student loans, credit card debt or mortgages on homes they can’t afford. He also assaults the idea of saving one’s way to wealth as absurd and counterproductive, using his own experience of trying to save money while poor as an example. Instead of promoting an austere lifestyle of clipping coupons and spending as little as possible, he shows how those habits can actually prevent people from becoming wealthy.

#2 – ABCs of Making Money

International Bestseller. The largely word-of-mouth success is due to its unique approach: instead of just giving the reader the usual do’s and don’ts of managing money – which it does in very clear, actionable terms – this invaluable book walks readers through the psychology of money. Do you ever wonder what makes some people successful while others are destined to struggle their whole lives? … The difference is in their Attitudes toward money. If you don’t examine this issue first, then all the self-help books and courses in the world will be a waste. The ABCs of Making Money is a simple, step-by-step guide for everyone. This common sense approach contains lots of simple checklists, self-directed exercises and tips. It demystifies the secrets of making money while providing proven strategies for the average person to painlessly create wealth. It has already helped hundreds of thousands of people and been acclaimed by universities and charities in the U.S. Amongst other things you will learn: how to achieve financial freedom, gain control of your life, eliminate financial stress and stop living paycheck to paycheck.

#3 – A Beginner’s Guide to the Stock Market: Everything You Need to Start Making Money Today

Learn to make money in the stock market, even if you’ve never traded before. The stock market is the greatest opportunity machine ever created. This book will teach you everything that you need to know to start making money in the stock market today. Don’t gamble with your hard-earned money. If you are going to make a lot of money, you need to know how the stock market really works. You need to avoid the pitfalls and costly mistakes that beginners make. And you need time-tested trading and investing strategies that actually work. This book gives you everything that you will need. It’s a simple road map that anyone can follow.



China Plans To Set A Lower Economic Growth Target Of Around 6% In 2020

◊ China Economic Growth 2020 ◊

China plans to set a lower economic growth target of around 6% in 2020 from this year’s 6-6.5%, relying on increased state infrastructure spending to ward off a sharper slowdown, policy sources said.

Chinese leaders are trying to support growth to limit job losses that could affect social stability, but are facing pressure to tackle debt risks caused by pump-priming policies.

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The proposed target, to be unveiled at China’s annual parliamentary session in early March 2020, was endorsed by top leaders at the annual closed-door Central Economic Work Conference this month, according to three sources with knowledge of the meeting’s outcome.

“We aim to keep next year’s growth within a reasonable range, or around 6%,” said a source who requested anonymity. Top leaders pledged to keep economic policies stable while making them more effective to achieve growth targets in 2020, state media said on Thursday.

Next year will be crucial for the ruling Communist Party to fulfill its goal of doubling gross domestic product (GDP) and incomes in the decade to 2020.

Economic growth of nearly 6% next year could be enough to meet that goal given the economy is expected to expand about 6.2% this year, policy insiders said.

Officials at the National Development and Reform Commission and the Ministry of Finance were not immediately available for comment on Saturday.

FISCAL BOOST… The government aims to boost infrastructure investment by allowing local governments to issue more special bonds next year, but there is less room for tax cuts, the sources said.

The annual budget deficit could rise from this year’s 2.8% of GDP, but is likely to be kept within 3%, they said.

Local governments could be allowed to issue special bonds worth some 3 trillion yuan ($426.20 billion) in 2020 to fund infrastructure projects, including 1 trillion yuan front-loaded to this year, they said. “Fiscal policy will provide a key support for the economy,” said one source.

The central bank is likely to ease policy further to encourage lending and lower corporate funding costs, but it wants to avoid fanning property speculation and inflation expectations after consumer inflation hit a near eight-year high in November, the sources said.

Beijing has unveiled a raft of pro-growth measures this year, cutting taxes and fees and letting localities issue 2.15 trillion yuan in special bonds, alongside cuts in reserve requirements and lending rates to boost credit.

But top leaders have ruled out aggressive stimulus for fear of pushing up debt levels.

A trade deal with the United States could ease pressure on Chinese exporters, but more policy steps are needed to underpin weak demand at home and abroad, policy insiders said.

The United States and China cooled their trade war on Friday, announcing an agreement that reduces some U.S. tariffs in exchange for what U.S. officials said would be more Chinese purchases of American farm products and other goods.

FINANCIAL RISKS… Top leaders at the meeting listed preventing financial risks as a key priority for 2020 and called for keeping the debt-to-GDP ratio largely stable.

They also pledged to prepare “contingency plans” to cope with growing global volatility and risks. But any sharper slowdown could put more pressure on small firms, which could in turn hit smaller banks – the most vulnerable part of the banking sector, policy insiders said.

Private companies have defaulted on bond payments at a record rate this year, while capital investment has slowed. A rare state seizure of a regional bank earlier this year and state rescues of lenders have also sharpened concerns about the health of small banks.

“Small firms will continue to face big pressure next year, and that could affect the financial sector,” said one insider.



Fed Holds Rates Steady

⇑⇓ Today’s Stock Market Quotes ⇓⇑

The U.S. Federal Reserve on Wednesday held interest rates steady and signaled borrowing costs are likely to remain unchanged indefinitely, with moderate economic growth and low unemployment expected to continue through next year’s presidential election. The decision by the U.S. central bank‘s rate-setting committee left the benchmark overnight lending rate in its current target range between 1.50% and 1.75%.

New economic projections showed a solid majority of 13 of 17 Fed policymakers foresee no change in interest rates until at least 2021. The other four saw only one rate hike next year.

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Notably, no policymakers suggested lower rates would be appropriate next year, a sign the Fed feels it has engineered a “soft landing” after a volatile year in which recession risks rose, the U.S. bond yield curve inverted, and trade policy disrupted markets.

“The Committee judges the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation near the … symmetric 2 percent objective,” the Fed said in a policy statement after the end of a two-day meeting.

There were no dissents to the policy statement, the first without opposition since the April 30-May 1 meeting. In the midst of an ongoing U.S.-China trade war, Fed policymakers said they would continue monitoring “global developments” in deciding whether interest rates need to change. They also said they would keep an eye on “muted inflation pressures,” a reflection of concern that the pace of price increases has failed to hit the central bank’s target.

Fed Chairman Jerome Powell is scheduled to hold a press conference at 2:30 p.m. EST (19:30 GMT) to discuss this week’s policy meeting, the last of the year.

After the Fed’s October policy meeting, Powell said it would take a “material” change in the economic outlook for the Fed to change rates again. The Fed cut rates three times this year, including in October.

The quarterly economic projections released on Wednesday showed little change from those in September, as policymakers sketched out an economy they feel has skirted recession risks and is poised to grow close to trend for several years more.

A reference in the October policy statement to “uncertainties” about the economic outlook was dropped on Wednesday. Gross domestic product at the median is projected to grow 2% next year and 1.9% in 2021.

Unemployment is seen staying at its current level of 3.5% through next year, rising to only 3.6% in 2021. In a demonstration of the disconnect between that low level of unemployment and inflation, the pace of prices increases is expected to rise only to 1.9% next year.

“The labor market remains strong and … economic activity has been rising at a moderate rate,” the Fed said. It added, however, that business investment and exports remained weak.

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The economy will be a central issue in U.S. President Donald Trump’s reelection campaign against a Democratic challenger likely to call for different economic policies. Trump repeatedly criticized the Fed this year for not cutting rates faster and deeper.

The Fed’s forecasts offered little obvious fodder for either Democrats or Republicans, with the economy largely seen performing as it has – far short of the 3% annual growth Trump promised to produce, but also with historically low rates of unemployment. Today’s Deals: Great Savings. Every Day.


The Best Movies Related To Stock Market {2020}

Top Movies Related To Stock Market {2020} #1 – The Big Short The Big Short is a 2015 American biographical comedy-drama film directed by Adam McKay. Written by McKay and Charles Randolph, it is based on the 2010 book The… Read More ›

Best Stock Market Books For Beginners {2020}

Best Stock Market Books For Beginners {2020} Amazon #1 – The Intelligent Investor. (Revised Edition) This classic text is annotated to update Graham’s timeless wisdom for today’s market conditions… The greatest investment advisor of the twentieth century, Benjamin Graham, taught… Read More ›

Diamond Crisis Gets Worse For Global Giant De Beers

The diamond industry is in crisis as De Beers’s buyers grow increasingly frustrated with the cost of rough stones as the price of polished gems slump. That’s led to wafer-thin margins and losses for some of the traders that buy… Read More ›

Stocks To Buy Today {2020}

Soon, 2019 will be over… therefore it’s time to start looking at some of the top stocks to buy for 2020. ⇑⇓ Today’s Stock Market Quotes ⇓⇑ United Technologies (UTX). Following a strategic review, the company decided it would spin off its… Read More ›


U.S. Consumer Inflation Expectations Rebound From Five-Year Low

⇑⇓ Today’s Stock Market Quotes ⇓⇑

U.S. consumers’ inflation expectations rose slightly in November, bringing the outlook for near and medium-term inflation up from a five-year low in a New York Federal Reserve survey, potentially offering relief to policymakers worried about sagging inflation.

The median outlook for what inflation will be over the next three years rose by 0.1 percentage point to 2.5%, the survey found. Expectations for inflation over the next 12 months rose slightly by 0.02 percentage point to 2.4%. In October, both inflation outlooks were at a series low for the survey, which began in 2013.

Fed officials lowered interest rates three times this year in an effort to immunize the U.S. economy from the potential risks posed by a global slowdown, a prolonged trade war with China and a slump in business investment. Since the last rate reduction, several policymakers have emphasized the risks of inflation being too low, and signaled an openness to letting inflation run above 2% to meet the Fed’s symmetric inflation target.

Policymakers have repeatedly suggested that rates, which are now at a target range of 1.5% to 1.75%, are likely to remain on hold for the time being, unless there is a strong deterioration in the economic outlook.

The likelihood that Fed officials will hold still at this week’s policy meeting rose after last week’s blockbuster jobs report. The U.S. economy added a greater than expected 266,000 jobs in November, bringing the unemployment rate down to a 50-year low.

Consumers are also optimistic about the labor market and their job prospects, according to the New York Fed survey. Workers’ perceived risk of losing a job in the next 12 months dropped to an average of 14.4% in November, from 14.8% in October. The average chance of finding work after a job loss also rose slightly to 59.3% in November from 58.8% the month before.

Workers feel more confident in their ability to afford their bills, the survey found. The average chance of missing a minimum debt payment over the next three months fell to 11.3% in November from 11.6% the month before. Expectations for household income growth rose to 2.9% in November from 2.8% in October.


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⇑⇓ Today’s Stock Market Quotes ⇓⇑

Investors pushed up the value of risk assets on the assumption that the American economy isn’t close to signaling a recession. Stocks rallied as strong jobs and consumer sentiment reports bolstered confidence in the world’s largest economy. Treasuries fell.

The S&P 500 extended gains into a third day after data showed payrolls climbed 266,000 — the most since January — as wages topped estimates and consumer sentiment increased to a seven-month high. Treasury 10-Year yields rose above 1.8%. The dollar and oil advanced.

Investors pushed up the value of risk assets on the assumption that the American economy isn’t close to signaling a recession — a fear that has confronted investors amid an ongoing trade war. White House economic adviser Larry Kudlow says the U.S. and China are “still close” to reaching a phase-one trade agreement.

“The much stronger-than-expected 266,000 jobs created in November helps bolster hopes for a pick-up in global growth,” said Alec Young, managing director of global markets research at FTSE Russell. “It’s also a well-timed shot in the arm for investor confidence given ongoing U.S.-China trade uncertainty.”

A strong jobs report could reduce the urgency for a deal, given that escalating levies have failed to significantly dent growth. But it could also validate Federal Reserve Chairman Jerome Powell’s view that rates can stay on hold following three cuts.

Earlier Friday, equities rose after China said it’s in the process of waiving retaliatory tariffs on imports of U.S. pork and soy by domestic companies — a procedural step that may also signal a broader trade agreement with the U.S. is drawing closer.

Elsewhere, oil climbed after Saudi Arabia surprised the market by promising significant additional production cuts beyond what was agreed with fellow OPEC+ members. Th euro fell after Germany’s industrial slump unexpectedly deepened in October amid a steep decline in investment goods.


⇑⇓ Today’s Stock Market Quotes ⇓⇑


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Stocks Fall on Manufacturing Report

⇑⇓ Today’s Stock Market Quotes ⇓⇑

Monday’s moves were a step back for stocks after they closed out their best month since June. The market has climbed to fresh highs in recent weeks, buoyed by data showing the U.S. service sector on solid footing. But lingering uncertainty over trade policy and signs of weakening in the industrial sector have kept many investors cautious.

U.S. stock futures pared gains early Monday after President Trump said on Twitter that he would restore tariffs on steel and aluminum imports from Brazil and Argentina. He also accused the two countries of devaluing their currencies.

“We’ve seen world trade slowing down. The last thing we need is more tariffs to slow it down further,” said Lucy Macdonald, chief investment officer for global equities at Allianz Global Investors. “This has been a major source of concern for investors all year: trade, primarily the U.S. and China, but also the U.S. and everywhere else.”

Stock declines then accelerated after a gauge of U.S. factory activity came in weaker than economists had expected. The Institute for Supply Management’s manufacturing index decreased to 48.1 in November from 48.3 in October, marking the fourth straight sub-50 reading. Readings below 50 indicate a contraction in activity.

Even with Monday’s declines, stocks are still up double-digit percentages in 2019 and headed for their best year since 2013. U.S. stocks are also continuing to outperform indexes around the world, with the S&P 500’s 2019 gains outpacing that of the Shanghai Composite, Japan’s Nikkei Stock Average and the Stoxx Europe 600.

But some traders say they wouldn’t be surprised if there was more volatility ahead in the final weeks of the year. “We’ve seen this movie before,” said Mohit Bajaj, director of ETF trading solutions at WallachBeth Capital, who referenced the year-end pullback from 2018. Money managers are often willing to sell to lock in their profits before the end of the year, he added.

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Markets were also hit Monday by selling in the technology sector, with losses hitting everything from payment processors to semiconductor companies. The declines appeared to be exacerbated by losses across momentum funds, Mr. Bajaj said. Such funds, which seek to track stocks with the best returns as of late, often include technology shares.

Nvidia slipped 2.8%, while Lam Research fell 1.8% Changes in analysts’ ratings also drove swings among individual stocks. Streaming media platform Roku fell 16% after Morgan Stanley lowered its rating for the company to “underperform” from “equal weight,” warning investors that revenue and profit growth would likely slow significantly in 2020.

The pan-continental Stoxx Europe 600 index swung lower after the president’s tweet, falling 1.6%. The gauge had earlier gained as much as 0.7% after China’s economy showed signs of stabilizing and a key European survey signaled better-than-expected manufacturing conditions.

Two separate surveys of manufacturers in China pointed to improving confidence and demand last month. Factory activity in the euro area also gave cause for cautious optimism, with the rate of contraction easing more than markets had expected for the 19-nation region.

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While economists said it was too early to say that China, the world’s second-largest economy, had recovered, markets earlier in the day had cheered the fact that another major risk to the global economy seemed to be diminishing.

Separately, People’s Bank of China Gov. Yi Gang said the central bank wouldn’t resort to “competitive” quantitative easing, even if interest rates in other major economies approached zero. Growth remained within a reasonable range, and inflation was relatively mild overall, Mr. Yi wrote in the Communist Party’s main political journal, Qiushi. The Shanghai Composite Index ended the day largely flat.

Meanwhile, U.S. crude oil jumped 1.7% to $56.13 a barrel after Persian Gulf officials said Saudi Arabia would push for an extension to oil-production cuts through mid-2020 at an Organization of the Petroleum Exporting Countries summit this week. The kingdom is targeting prices of at least $60 a barrel, according to a Saudi oil adviser.

Later in the week, investors will get a look at a gauge of activity in the U.S. service sector, as well as the Labor Department’s November employment report.

Economists surveyed by The Wall Street Journal expect to see a small pickup in wage growth and solid job creation, which would show investors that the labor market remains strong heading into the end of the year.




Warning Sign For The US Economy – Personal Loans Are Growing Like A Weed

Personal loans are up more than 10 percent from a year ago, according to data from Equifax, a rapid pace of growth that has not been seen on a sustained basis since shortly before the Great Recession. All three of the major consumer credit agencies — Equifax, Experian and TransUnion — report double-digit growth in this market in recent months.

Experts are surprised to see millions of Americans taking on so much personal loan debt at a time when the economy looks healthy and paychecks are growing for many workers, raising questions about why so many people are seeking an extra infusion of cash.

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“Definitely yellow flares should be starting to go off,” said Mark Zandi, chief economist at Moody’s Analytics, which monitors consumer credit. “There’s an old adage in banking: If it’s growing like a weed, it probably is a weed.”

Personal loans are unsecured debt, meaning there is no underlying asset like a home or car that backs the loan if someone cannot repay. The average personal loan balance is $16,259, according to Experian, a level that is similar to credit card debt.

Personal loan balances over $30,000 have jumped 15 percent in the past five years, Experian found. The trend comes as U.S. consumer debt has reached record levels, according to the Federal Reserve Bank of New York.

The rapid growth in personal loans in recent years has coincided with a FinTech explosion of apps and websites that have made obtaining these loans an easy process that can be done from the comfort of one’s living room. FinTech companies account for nearly 40 percent of personal loan balances, up from just 5 percent in 2013, according to TransUnion.

More than 20 million Americans have these unsecured loans, TransUnion found, double the number of people that had this type of debt in 2012. “You can get these loans very quickly and with a very smooth, sleek experience online,” said Liz Pagel, senior vice president of consumer lending at TransUnion. “We haven’t seen major changes like this in the financial services landscape very often.”

Total outstanding personal loan debt stood at $115 billion in October, according to Equifax, much smaller than the auto loan market ($1.3 trillion) or credit cards ($880 billion). Economists who watch this debt closely say personal loans are still too small to rock the entire financial system in the way $10 trillion worth of home loans did during the 2008-09 financial crisis.

But personal loan debt is back at levels not far from the January 2008 peak, and most of the FinTech companies issuing this debt weren’t around during the last crisis, meaning they haven’t been tested in a downturn.

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“The finance industry is always trying to convince us that there are few risks to borrowing and overleveraging is not a problem,” said Christopher Peterson, a University of Utah law professor and former special adviser to the Consumer Financial Protection Bureau. “Overleveraging yourself is risky for individuals and for our country.”

The U.S. economy is powered by consumer spending, and debt helps fuel some of the purchases. Economists are watching closely for signs that Americans are struggling to pay their bills, and personal loans could be one of them.

The most common recipient of a personal loan is someone with a “near prime” credit score of 620 to 699, a level that indicates they have had some difficulty making payments in the past. “The bulk of the industry is really in your mid-600s to high 600s. That’s kind of a sweet spot for FinTech lenders,” said Michael Funderburk, general manager of personal loans at LendingTree.

Funderburk says they see a lot of consumers who are employed “doing perfectly fine” with their finances, but something unexpected happens such as job loss or a medical emergency and they end up missing a bill or accumulating more debt than they wanted.

The vast majority of customers go to FinTech providers such as SoFi, LendingTree, Lending Club and Marcus by Goldman Sachs for debt consolidation, the lenders say. People run up debt on multiple credit cards or have a medical bill and credit card debt and they are trying to make the payments more manageable. Some seek a lower monthly payment, similar to refinancing a mortgage. Others want to pay off the debt in three years to clean up their credit score.

FinTechs say they are helping people make smarter financial choices. While a credit card allows people to keep borrowing as long as they are under the credit limit, a personal loan is for a fixed amount and must be paid off over a fixed period, generally three or five years. Some online lenders allow people to shop around for the best rate, and most of the main players cap the interest rate at 36 percent to ensure they are not offering any payday loan products.

But there is concern that some Americans get personal loans to tide them over and then continue to take on more credit card or other debt.

Credit card debt has continued to rise alongside personal loans, according to the latest data from the Federal Reserve Bank of New York. TransUnion has recently noticed an uptick in retailers offering personal loans when someone comes to the cashier to buy furniture or holiday toys.

“I have mixed feelings about personal loans. They are superior to credit cards because the payments are fixed,” said Lauren Saunders, associate director of the National Consumer Law Center. “The problem is many people still have their credit card and end up running up their credit card again, so they end up in a worse situation with credit card debt and installment loans on top of it.”

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Saunders also notes these loans are mainly regulated by state law, and the rules and watchdog capabilities vary widely by state. FinTechs say they are using technology to deliver a better deal. One of their big innovations is giving people who take out personal loans a discount if they transfer the cash they get from the loan directly to pay off their bills instead of sending it to their bank account first.

“This has been one of the most successful products we have ever launched. People are trying to do the right thing and they’re getting offered a lower rate if they do balance transfer and direct deposit,” said Anuj Nayar, a financial health officer at LendingClub, a peer-to-peer lender that offers personal loans up to $40,000.

Despite the rapid growth in personal loans lately, borrowers appear to be able to pay back the debt. The delinquency rate for personal loans is 4.5 percent, according to Equifax, a low level by historical standards and well below the 8.4 percent delinquency rate in January 2008.

But as the number of Americans with one of these loans grows, so does the potential for pain if the unemployment rate ticks up and more people find themselves strapped for short-term cash.



U.S. Retail Sales Rebound

U.S. retail sales rebounded in October, but consumers cut back on purchases of big-ticket household items and clothing, which could temper expectations for a strong holiday shopping season.

The Commerce Department said on Friday retail sales increased 0.3% last month, lifted by motor vehicle purchases and higher gasoline prices, reversing September’s unrevised 0.3% drop, which was the first decline in seven months. Economists polled by Reuters had forecast retail sales gaining 0.2% in October. Compared to October last year, retail sales advanced 3.1%.

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Excluding automobiles, gasoline, building materials and food services, retail sales increased 0.3% last month. Data for September was revised lower to show the so-called core retail sales slipping 0.1% instead of being unchanged as previously reported. Core retail sales correspond most closely with the consumer spending component of gross domestic product.

The rebound in core retail sales added to reports this week showing firming inflation in supporting the Federal Reserve’s signal that it will probably not cut interest rates again in the near term. Other reports this month have shown solid job growth in October and an acceleration in services sector activity.

The data and easing trade tensions between Washington and Beijing have diminished financial market fears of a recession. Fed Chair Jerome Powell told lawmakers on Thursday that “the U.S. economy is the star economy these days,” compared to other advanced economies and “there’s no reason that can’t continue.”



The U.S. central bank last month cut rates for the third time this year and signaled a pause in the easing cycle that started in July when it reduced borrowing costs for the first time since 2008.

Consumer spending, which accounts for more than two-thirds of the economy, increased at a 2.9% annualized rate in the third quarter. The economy’s engine is being powered by the lowest unemployment rate in nearly 50 years and has helped to blunt the hit on the economy from the White House’s 16-month trade war with China, which had led to a decline in capital expenditure and a recession in manufacturing.

Auto sales increased 0.5% in October after declining 1.3% in September. Receipts at service stations surged 1.1%, reflecting higher gasoline prices, after dipping 0.1% in the prior month. Online and mail-order retail sales increased 0.9% after gaining 0.2% in September.

But sales at electronics and appliance stores fell 0.4%. Receipts at building material stores dropped 0.5% and sales at clothing stores declined 1.0%. Spending at furniture stores fell 0.9%, the largest decline since December 2018.

Americans also cut back on spending at restaurants and bars, with sales falling 0.3%, the most in nearly a year. Spending at hobby, musical instrument and book stores dropped 0.8%.

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The U.S. Government Ended Fiscal Year 2019 With The Largest Budget Deficit in Seven Years

◊ United States Federal Budget ◊

It is the first time since the early 1980s that the budget gap has widened over four consecutive years. The figures reflect the second full budget year under U.S. President Donald Trump, a Republican, and come at a time when the country has an expanding tax base with moderate economic growth and an unemployment rate currently near a 50-year low.

The U.S. budget deficit widened to $984 billion, which was 4.6% of the nation’s gross domestic product. The previous fiscal year deficit was $779 billion, with a deficit-to-GDP-ratio of 3.8%. Total receipts increased by 4% to $3.5 trillion but outlays rose by 8.2% to $4.4 trillion.


Americans from all walks of life are flourishing again thanks to pro-growth policies enacted by this administration,” Acting Office of Management and Budget Director Russ Vought said in a statement accompanying the figures.

The deficit reached a peak of $1.4 trillion in 2009 as the Obama administration and Congress took emergency measures to shore up the nation’s banking system during the global financial crisis and provide stimulus to an economy in recession.

The annual budget deficit had been reduced to $585 billion by the end of former President Barack Obama’s second term in 2016 and Republicans in Congress during that time criticized Obama, a Democrat, for not reducing it further.

Since then, the budget deficit has jumped due in part to the Republican’s overhaul of the tax system, which in the short term reduced revenues, and an increase in military spending. By the end of fiscal 2019, corporate tax payments were up 5%. Customs duties, which have been boosted by the Trump administration’s levying of tariffs on China and others, were up 70% year-on-year to a record high.

GROWING DEFICITS… “This is an administration that came in talking about reducing the deficit and over their term in office, they’ve quite frankly been increasing,” said Bill Hoagland, Senior Vice President at the Bipartisan Policy Center. “We normally reduce deficits in times of growth.”

The economy grew 2.9% in 2018 but activity is slowing as the stimulus from the $1.5 trillion tax cut package fades and the prolonged U.S-China trade war weighs on business investment.

There was higher spending on defense, healthcare and social security programs, the data showed. The United States has an ageing population and economists have warned that the cost of mandatory spending on Social Security and Medicare as well as federal retirement programs for the elderly will be fiscally unsustainable.

Earlier this year the U.S. Congress passed a two-year budget deal backed by Trump that would increase federal spending on defense and other domestic programs. Some of the widening of the deficit came from more spending on interest payments on the national debt. Borrowing has increased over the past year.

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For September, the U.S. government recorded an $83 billion surplus, a 31% drop from the same month last year. When accounting for calendar adjustments, the surplus last month was $17 billion compared with an adjusted surplus of $51 billion the previous year. For the fiscal year, the adjusted deficit was $1 trillion.

Outlays were $291 billion in September, up 30% from the same month a year earlier while receipts totaled $374 billion, an increase of 9% from the year-ago month.



Strong Economy??? … Why Are So Many Workers on Strike?

How strong is the us economy today?… Even as the economy rides a 10-year winning streak, tens of thousands of workers across the country, from General Motors employees to teachers in Chicago, are striking to win better wages and benefits. But, according to those on strike, the strong growth is precisely the point. Autoworkers, teachers and other workers accepted austerity when the economy was in a free fall, expecting to share in the gains once the recovery took hold.


Increasingly, however, many of those workers believe that they fell for a sucker’s bet, having watched their employers grow flush while their own incomes barely budged. Corporate profits are near a record high, up nearly 30 percent since the pre-recession peak in 2006. During the same time, the income of the typical household has increased by less than 4 percent. Some workers are responding with measures like strikes partly as a result.

“That was the understanding — that if we gave up the concessions back in 2007 and 2009, that once G.M. got back on their feet, we would slowly get those things back,” said Tammy Daggy, who worked at the now-idled G.M. plant in Lordstown, Ohio, for nearly 25 years. But on many issues, “we never did.” To an extent, the pattern of strikes reflects a recurring feature of the labor market: Workers typically become bolder the longer an expansion continues, using the leverage they have when jobs are harder to fill to demand greater compensation. This was particularly true during the three decades after World War II, according to a survey of research by Jake Rosenfeld, a sociologist at Washington University in St. Louis.

Overall strike activity has fallen sharply since the 1970s, as the ranks of unions have been depleted, dropping to about 10 percent of the work force from over 25 percent. Employers have also responded more aggressively — for example, by permanently replacing striking employees. Now, though, workers appear increasingly willing to walk off the job. Last year, the number of workers who participated in significant strikes soared to nearly 500,000, its highest point since the mid-1980s, while the total duration of such strikes reached a 15-year high.

The backdrop for this trend is a rising gap between the money employers are making and the portion they’re sharing with workers. The share of the national income that workers receive fell in the early 2000s to its lowest level since World War II according to some measures, then collapsed further in 2009. It has yet to recover. That may be partly because the labor market is weaker than the picture painted by the official unemployment rate of 3.5 percent. That rate measures only the number of out-of-work Americans who say they are looking for jobs. It excludes Americans in their prime working years who are not actively looking for work but, given the opportunity, might choose to re-enter the work force.

According to Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, the group who could quickly re-enter the work force is potentially large, and may help employers avoid bidding up wages to lure those who are currently employed. “We still don’t know how much shadow labor is out there,” Mr. Kashkari said in an interview on Thursday. But regardless of the strength of the labor market, in recent decades employers have amassed more power to hold wages down.

“In the late 1990s, it seemed like maybe a hot economy was sufficient” to substantially raise workers’ incomes and narrow inequality, said Jason Furman, who led the White House Council of Economic Advisers during President Barack Obama’s second term. But a seriesofreports that Mr. Furman’s council released in 2016 documented changes that have allowed employers to pocket more of the gains from growth. Those changes include noncompete clauses in employment contracts and even outright collusion, in which companies explicitly agree not to hire workers away from one another or to offer identical wages.

Employers argue that they need additional flexibility with their work force as they contend with global competition and technological changes. Scholars say there was an element of economic opportunism behind the strikes of the 1950s and ’60s, as unions exploited their bargaining power in tight labor markets. But workers say today’s strikes are fueled by a deeper sense of unfairness and economic anxiety. This past week, for example, unions representing about 2,000 workers at copper mines and smelters in Arizona and Texas went on strike, saying their members had not received raises for a decade.

“It’s about: ‘O.K., the government is not going to take care of us. Business is not going to take care of us. We’ve got to take care of ourselves,’” said D. Taylor, president of the hospitality workers union, UNITE HERE, which has had thousands of members strike in the past two years, including at Marriott International. “It’s been bubbling up for some time. Now it’s come up to the surface.” In the airline industry, workers who made numerous concessions amid a wave of post-9/11 corporate restructurings complain that they continue to struggle under austerity even as the airlines post outsize profits.

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“They got all these employees to agree to terms within the shadow of bankruptcy court, then they created these megamergers and are making billions,” said Sara Nelson, president of the Association of Flight Attendants.

While airline workers, unlike most private-sector workers, must receive permission from the government before they can strike, they have repeatedly demonstrated their anger. Thousands of airline catering workers, many of whom make under $12 per hour, voted to strike this year, pending the assent of a federal mediation board. Airline mechanics, including at Southwest Airlines, have won raises after effectively gumming up the operations of their employers: The mechanics significantly increased the number of low-grade maintenance problems they identified, leading to widespread flight delays and cancellations. (The mechanics denied that this was their intention.)

Teachers have expressed frustration that their districts were slow to reverse the spending cuts that followed the economic crisis a decade ago, even as state and local budgets have recovered. “When the recession hit, teachers kind of buckled down. We said: ‘We get it. Everybody has got to pull their weight,’” said Noah Karvelis, who helped organize last year’s teacher walkouts in Arizona that forced lawmakers to raise teacher salaries and partially restore education funding. “But 10 years later, the state’s economy is back, we’re doing really well, and still the cuts are there. It was a huge, huge thing for us.”

In Chicago, teachers who went on strike on Thursday are demanding that local officials devote more of a recent billion-dollar cash infusion from the state to raises. They point out that teaching assistants’ pay starts at around $30,000 a year but they are required by law to live in the high-cost city. And veteran teachers often leave the district during the several years in which they only receive cost-of-living increases. The teachers also want the district to hire more school nurses and librarians, who are in short supply across Chicago.

“In Chicago, the citizenry during the austerity talks believed it,” said Michelle Gunderson, a first-grade teacher on the union’s bargaining committee, referring to the lean contract negotiated in 2016. “At that time, we had a Republican governor who wasn’t funding our schools. But now an infusion of money has come in that has not made it to the classroom.” The school district has noted that $700 million of that money went directly to teacher pensions, and that the rest kept the district solvent. The district has proposed raising salaries 16 percent over five years and substantially increasing the number of nurses.

For its part, while G.M. has made $35 billion in profits in North America over the past three years, sales appear to be slowing in the United States and China. Domestic automakers also say they are under pressure from foreign rivals, which have lower labor costs in nonunion factories in the South, and to invest in developing electric vehicles.

That is one reason G.M. sought to preserve a so-called two-tiered wage scale introduced amid the company’s struggles over a decade ago, in which workers hired after 2007 make up to 45 percent less than the $31 an hour that veteran workers currently earn. The company also relies on a cadre of temporary workers who earn even less. As part of the tentative deal the company reached with the United Automobile Workers, G.M. appears to have agreed to a path for temps to become permanent workers, and to alter its tiered wage scale. Workers will vote on the agreement over the next several days, and a result is expected on Friday.

Some workers are skeptical that the union made sufficient progress on these questions, and on the extent to which G.M. can continue to shift production to Mexico, which has imperiled jobs in the United States. Selina Estrada, 32, who assembles doors at the G.M. plant in Spring Hill, Tenn., said she feared the company would prevent temporary workers from attaining permanent status by laying off those workers before they had achieved the required three years of “continuous service.”

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“They’ll keep turning them around and laying them off right before their three years,” she said. “It’s never going to happen.”



China’s Imports And Exports Fell More Than Expected

China’s import and export data for September came in worse than expected. In U.S. dollar terms, China’s exports fell 3.2% in September from a year ago, while imports dropped 8.5% during the same period, according to Reuters. Economists polled by Reuters had expected Chinese exports denominated in the U.S. dollar to fall by 3% and imports to decline by 5.2% in September, compared to a year ago. The country’s overall trade surplus for last month was forecast to be $33.3 billion, according to the Reuters poll.

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In August, China’s exports in U.S. dollars unexpectedly fell by 1% year-over-year — the biggest fall since June — as shipments to the U.S. slowed down sharply. Chinese imports, meanwhile, dropped 5.6% in the same period. That brought its trade surplus to $34.83 billion, according to Chinese customs data. In yuan terms, China’s exports in September was 0.7% lower from a year ago, while imports dropped 6.2% during the same period, according to Reuters.

Martin Lynge Rasmussen, China economist at consultancy Capital Economics, said exports out of the world’s second-largest economy would take time to recover. “The mini US-China trade deal reached on Friday doesn’t alter the outlook significantly,” he wrote in a note… “Looking ahead, exports look set to remain subdued in the coming quarters,” he added. “Meanwhile, import growth has slowed sharply in recent quarters and now looks unusually weak relative to economic growth. A partial rebound in headline import growth is therefore likely in the near term.”


The Chinese economy — the second largest in the world — is growing at a slower pace amid the protracted trade battle between Beijing and Washington. Officials from both countries met in Washington last week to discuss trade, and President Donald Trump said the U.S. has come to a “very substantial phase one deal” with China. Trump said that deal will involve China purchasing $40 billion to $50 billion worth of American farm products, and address concerns such as intellectual property theft and currency manipulation. Washington also suspended an increase in tariffs on Chinese goods planned for this week. A spokesman from the Chinese customs said the country’s trade frictions with the U.S. has affected its export and import activity, Reuters reported on Monday.

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Federal Deficit For 2019 is Estimated at $984 Billion


StockMarketNews.Today — The federal budget deficit for 2019 is estimated at $984 billion, a hefty 4.7 percent of gross domestic product (GDP) and the highest since 2012, the Congressional Budget Office (CBO) said on Monday.

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The difference between federal spending and revenue has only ever exceeded $1 trillion four times, in the period immediately following the global financial crisis.The deficit, which has grown every year since 2015, is $205 billion higher than it was in 2018, a jump of 26 percent.

The CBO has warned that the nation’s debt is on an unsustainable path. Higher levels of debt increase borrowing costs, make it harder for the government to battle economic downturns and increase the share of future spending devoted to paying off interest costs.

Since President Trump took office, the GOP has passed a massive tax cut package that reduced revenue, while Democrats and Republicans have agreed to increase spending year after year. Budget watchers note that the main drivers of the deficit, however, come from automatic spending programs such as Social Security, Medicare and Medicaid.



“Democrats and Republicans must be held responsible for the outrageous deficit reported today by the CBO,” said Jason Pye, vice president of legislative affairs at the conservative advocacy group FreedomWorks.

“This unsustainable situation is only going to get worse,” he added. The final Treasury Department figures for the fiscal year, which ended on Sept. 30, will be published later this month and could include worse news.

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Previous Treasury estimates projected the deficit for the year surpassing $1 trillion.



Dow Jumps 250 Points After Steady Jobs Report

® StockMarketNews.Today ® — U.S. stocks rose on Friday as moderate jobs growth in September offered some relief from a spate of dismal economic data this week that has rankled markets and fueled concerns that the United States was sliding into a recession. September jobs numbers are likely to keep open the prospect that the Federal Reserve considers another interest-rate cut this month.

The U.S. jobs report—which showed a gain of 136,000 positions and unemployment falling to 3.5%—does little to alter a debate over whether the Fed should lower its benchmark rate at its Oct. 29-30 meeting. The report showed the U.S. economy has retained resilience amid a broader global slowdown. But recent surveys of manufacturing and service-sector activity have hinted at future weakness. Friday’s jobs report should quiet those fears for the moment.

Fed officials have been mum so far about plans for the October meeting, neither explicitly signaling a rate cut nor pushing back strongly on rising expectations from investors. Recent data disappointments indicate a global growth slowdown, amplified by uncertainty over the U.S.-China trade war, may be taking a greater toll on economic activity, consumer confidence and business investment. All of this has led investors in recent days to anticipate another rate cut later this month.

Fed Vice Chairman Richard Clarida didn’t expressly support or reject those expectations at an appearance Thursday evening hosted by The Wall Street Journal. “I do think the economy is in a good place,” he said. Mr. Clarida said he was very happy that the Fed had recently lowered its policy rate because “that put us in the place we need to be.”

He offered less about future decisions. “We are not on a preset course,” he said, adding that officials “will act as appropriate” to sustain recent growth. The jobs data did little to change market expectations about the Fed’s interest-rate plans. Trading in futures markets showed investors placed a roughly 80% probability on Friday morning of another rate cut this month, down from 90% on Thursday but up from 50% one week ago, according to CME Group.

Fed officials were divided at July and September meetings over whether lower interest rates were warranted. A solid majority of officials, led by Fed Chairman Jerome Powell, argued that steps to lower borrowing costs would help support an economy facing a global slowdown and increased risks.

Mr. Powell has argued that the costs of taking out an insurance policy against a sharper-than-anticipated slowdown are low at a time when inflation pressures have been tepid. Other colleagues have said that waiting for signs of a sharper deceleration in hiring is risky, saying that by the time labor markets weaken it may be too late for the Fed to stop a downturn.

“The idea that if you see trouble approaching on the horizon, you steer away from it if you can, I think that’s a good idea in principle,” Mr. Powell said at a news conference last month. “Applying that principle in a particular situation is where the challenge comes,” he said.

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Several colleagues on the rate-setting Federal Open Market Committee have resisted rate cuts. They say that despite rising risks to growth and a slowdown in manufacturing and businesses’ investment, the rest of the economy is strong enough to motor through. These critics have warned that cutting rates without stronger evidence of a slowdown could spur financial bubbles or waste ammunition needed to fight a downturn should it arrive.

Friday’s employment report provides grist for both camps. Wage growth slowed in September, indicating a possible decrease in demand for new labor. Hourly wages rose 2.9% for the 12-month period ended September, down from 3.2% in August and 3.4% in February.

The growth in average weekly earnings also cooled. Weekly wages rose 2.6% over the year ended September, the smallest gain in nearly two years and down from a recent high of 3.6% last October. Slower earnings growth should tamp down worries about rising inflation.

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Still, hiring has been strong enough in recent months to lower the unemployment rate, a sign of steady demand for labor. On average, employers have added nearly 157,000 jobs a month over the past three months, down from 189,000 for the year-earlier period. And the share of people 25-to-54 years old who are employed rose to their highest level since March 2007.



29% of Americans are Considered {Lower Class}

StockMarketNews.Today — American Lower Class ♦

Nearly one-third of American households, 29%, live in “lower class” households, the Pew Research Center finds in a 2018 report. The median income of that group was $25,624 in 2016.

Pew defines the lower class as adults whose annual household income is less than two-thirds the national median. That’s after incomes have been adjusted for household size, since smaller households require less money to support the same lifestyle as larger ones.

40% of Americans say they still struggle to pay bills… This doesn’t look like the best economy ever…

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The share of U.S. adults considered lower class varies depending on where you live, Pew notes: “The metropolitan areas with the largest shares of lower-income adults are located primarily in the Southwest.” The metro with the highest share is Laredo, Texas, where almost half of households (49%) are considered lower class.

More than half of American households, 52%, are considered middle class, Pew reports, while 19% are upper class. The median income of middle class households was $78,442 in 2016. For upper income households, it was $187,872.

According to the report, “the wealth gaps between upper-income families and lower- and middle-income families in 2016 were at the highest levels recorded.” The widening gap is “the continuation of a decades-long trend,” Pew adds: In 1970, when it first analyzed income data in America, the median income of upper-income households was 6.3 times that of lower-income households. That ratio increased to 7.3 in 2016.

More recent data from the U.S. Census Bureau finds that the gap between the rich and the poor has grown since 2016 and hit a new record in 2018.

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Billionaires like Ray Dalio and Bill Gates have weighed in on growing income inequality in the U.S. Dalio called it a “national emergency” earlier this year — and has called for higher taxes on the rich, like himself, to use toward things like public education and infrastructure.

“One way or another, the important thing is to take those tax dollars and make them productive,” he said on an episode of “60 Minutes.”

Self-made billionaire and Microsoft cofounder Bill Gates would also like to see higher taxes levied on the top earners. “I think you can make the tax system take a much higher portion from people with great wealth,” he said during an appearance on “The Late Show” with his wife, Melinda, in February 2019.

I think you can make the tax system take a much higher portion from people with great wealth.—Bill Gates

For practical reasons, Bill and Melinda Gates don’t want lawmakers to get bogged down in arguments about the top marginal rate, which is currently 37%. “If you focus on that, you’re missing the picture,” Bill said in an interview with The Verge.

“In terms of revenue collection, you wouldn’t want to just focus on the ordinary income rate, because people who are wealthy have a rounding error of ordinary income,” he said. “They have income that just is the value of their stock, which if they don’t sell it, it doesn’t show up as income at all. Or if it shows up, it shows over in the capital gains side.”

Instead, he suggested the government should be more progressive with “the estate tax and the tax on capital. … We can be more progressive without really threatening income generation.”

During a conversation with hundreds of high school students in New York City earlier this year, the couple specifically spoke out about the estate tax, which is levied on assets passed from one person to another, often from parent to child, at the time of death. Currently, it only applies to those who inherit estates worth more than $11.4 million.

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If you’re going to give money to your children, “you should be taxed at a very high rate for passing that on,” said Melinda, “so that a lot of it goes to the government and some goes to your kids.”

Bill chimed in: “You can go a long ways raising the estate tax, raising the capital gains tax and collecting more resources for the equity things we want government to be able to do.”



Tokyo Inflation Slows To 16-Month Low

◊ Tokyo Inflation – StockMarketNews.Today

A leading indicator of Japan’s core consumer inflation slowed for a second straight month to its lowest rate in more than a year, underscoring the challenge for the central bank in hitting its 2% price target.

Government data released on Friday showed core consumer prices in Tokyo, a leading indicator of nationwide price trends, rose 0.5% in September from a year earlier, slowing from a 0.7% gain in the previous month.

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The rise in the core consumer price index for Japan’s capital city, which includes oil products but excludes fresh food prices, undershot the median estimate of a 0.6% increase.


It was the slowest growth since May last year and weighed by declines in energy prices.

“October’s sales tax hike will serve as one factor for lifting inflation temporarily, but that will be offset by government steps to make pre-school education free of charge,” said Masaki Kuwahara, senior economist at Nomura Securities.

“For the time being, energy-related items will weigh on core inflation, which will remain in a downtrend.”

The stubbornly weak inflation and overseas headwinds are piling pressure on the Bank of Japan to ramp up an already massive stimulus program to forestall risks of a delay in hitting its elusive 2% inflation target.

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The central bank will scrutinize the inflation data and other key indicators at its next rate-setting meeting on Oct. 30-31, when it conducts a quarterly review of its growth and price projections.

At its policy meeting last week, the BOJ signaled its readiness to expand stimulus as early as next month by issuing a strong warning about risks that threaten Japan’s export-reliant economy.

But with interest rates at zero and companies wary about boosting spending amid growing uncertainty and risks, many analysts are skeptical that topping up monetary stimulus could accelerate inflation.

The so-called core-core CPI in Tokyo, which strips away the effects of both energy and fresh food prices, rose 0.6% in September, slowing from a 0.7% gain in August, the data showed.

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Tokyo’s overall CPI rose 0.4% in September from a year earlier, after 0.6% growth in the previous month.

Years of heavy money printing have failed to shake off entrenched deflationary mindset among the public and corporations, dashing the hopes of the central bank that aggressive stimulus will put an decisive end to deflation.

Under its current forecasts issued in July, the BOJ expects core consumer inflation to hit 1.0% in the current fiscal year ending in March 2020 and fall short of its 2% target for the following two years.



Australia’s Jobless Rate Unexpectedly Climbed

♦ Australian Unemployment ♦

Australia’s jobless rate unexpectedly climbed in August as the labor force swelled to a fresh record, signaling additional labor-market slack that sets the scene for further easing by the central bank.

Unemployment climbed to 5.3%, the highest level in a year, and above the 5.2% forecast by economists, data from the statistics bureau showed in Sydney Thursday. The 34,700 increase in jobs for the month was swamped by the seemingly inexorable rise in the participation rate to 66.2%.

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The result is the wrong direction for a Reserve Bank trying to push down unemployment and revive inflation that’s lain dormant for almost half a decade. Governor Philip Lowe has lowered the cash rate to 1% to support economic growth and is urging the government to add stimulus, an effort frustrated by a focus on returning the books to the black.

Just an hour prior to the release, Treasurer Josh Frydenberg announced an improved budget deficit of just A$690 million ($468 million) in the fiscal year that ended June 30. That dashed expectations of a surplus which may have allowed him to say the government had met its election promise and was now prepared to boost spending to support growth.

Thursday’s jobs report showed two key indicators of slack in the labor market worsening. The underemployment rate climbed 0.1 percentage point to 8.6% and underutilization — the sum of the unemployment and underemployment rates — advanced by the same amount to 13.8%.

“Stronger wage growth is unlikely for the foreseeable future,” said Callam Pickering, an economist at global jobs website Indeed, who previously worked at the central bank. “Rising unemployment is a negative for wages and inflation and justifies the Reserve Bank’s stance on rates. A rate cut at either their October or November meetings seems all but certain.”

The Aussie dollar fell after the report, buying 67.85 U.S. cents at 12:48 p.m. in Sydney from 68.13 before the data.

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Lowe earlier this year reduced the estimated level of full employment in the economy to 4.5% from around 5%, and cited the lower figure as justification for rate cuts in June and July. Money markets and economists expect him to ease twice more to 0.5%, a level that would be close to the lower bound of policy and open the door to unorthodox measures.

Two of the nation’s most-watched economists, Westpac Banking Corp.’s Bill Evans and JPMorgan Chase (NYSE:JPM) & Co.’s Sally Auld, think Lowe will move next month and again in February. The governor is due to speak Tuesday in an address titled “An Economic Update” and speculation is mounting that he could signal an imminent rate move then.

Meantime, Commonwealth Bank of Australia, the nation’s largest lender, said the government’s improved budget position provides scope for Frydenberg to help the central bank. With a potentially larger surplus also set for 2019-20, there were several policy measures that could compliment easier monetary policy, said Belinda Allen, a senior economist at Commonwealth.

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“The first would be to bring forward shovel-ready infrastructure projects. RBA Governor Lowe has made this point repeatedly,” she said. “The second policy option would be to bring forward the tax cuts scheduled for 1 July 2022.”







Recession Signals Flashed by The Bond Market May Have Been Exaggerated …

Some investors and analysts are convinced that fears of an imminent upset may be overdone.

Long-term bonds have been on a tear in recent weeks with yields tumbling more rapidly than almost any other time in the past decade. But the recession signals flashed by these moves may have been exaggerated because of “forced buying” among some investors.

The strong rally in long bonds has made them among the best performing assets of any market in the world this year. They have also caused dreaded inversions of the U.S. yield curve in August: That is where 10-year yields fall below two-year yields, a reliable signal that recession is around the corner.

Some investors and analysts are convinced that fears of an imminent upset may be overdone. A lot of the recent fall in yields has been because some banks, asset managers, insurers and pension funds have had to gorge on long bonds or bond derivatives because market moves have hurt other positions they hold.

This activity is often called “forced buying” since the trades are dictated by pre-existing risk models and investment strategies. “There was a fundamental driver to this move-in yields and that continues to be validated by economic data and the Fed,” said Josh Younger, head of U.S. interest rates derivatives strategy at JPMorgan in New York. “But the signals provided by the rates markets are being amplified by this hedging activity.”

Less than half the fall in 10-year yields during August—the biggest monthly drop in percentage point terms since 2011—was down to fundamental economic reasons, according to Mr. Younger. He figures 10-year Treasury yields that are currently priced around 1.5% are about one-quarter of a percentage point below where they would be without this activity.

One giveaway that hedging activity has been important in recent market moves is that yields in swap markets, where hedging is done, have fallen faster than those on bonds, according to Mr. Younger.

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There are several factors driving investors into long-dated bonds. Falling rates and a wave of Americans refinancing home loans means mortgage-backed bonds get paid off quicker than expected. Institutions who owned those bonds—banks, mortgage real-estate investment trusts and fund managers—are pushed into buying longer-dated Treasurys or interest-rate swaps as the quickest and cheapest way to replace the disappearing income.

Buying also comes from pension funds and insurers that sell annuities. When yields fall, their liabilities often grow faster than their assets. That can increase the so-called “duration gap” in their books, which is the shortfall between what they are going to earn on their assets and what they owe to pensioners. To close the gap, these businesses need more long-term assets.

Bets on low volatility in the bond options and futures markets—a trade popular among so-called unconstrained bond funds—can also produce extreme demand for long dated bonds when volatility spikes.

These trades rely on volatility and yields remaining within a limited range. When yields break lower, as they have recently, investors need to rebuild their long-term exposure quickly and rush into government bonds or swap markets to do so, says James McAlevey, head of rates at Aviva Investors in London.

On Wall Street, these effects all have typically obscure sounding names: mortgage bond owners face “negative convexity,” the risk that the duration of portfolios, or the time it takes for an investor to be paid back through coupon payments, could grow or shrink rapidly. Those betting on low volatility can find themselves “short gamma,” which refers to the risk of market losses on short-dated options on longer-term bonds and interest rate swaps.

“The lower we go in long-term bond yields, the more demand starts to increase for certain products: gamma hedging, convexity hedging and closing duration gaps,” said Mr. McAlevey. “You end up with a market that is all buyers and no sellers.”

None of these types of activity kick off a market move, but they can help it gather pace, said Mr. McAlevey. Hedging activity linked to volatility strategies can also create forced sellers when yields start to rise. “Gamma hedging works both ways,” he said. “So a lot of what’s going on is just going to lead to higher volatility.”

The upshot is that without these flows, the U.S. yield curve wouldn’t have inverted and there would be much less fevered chatter about a coming recession.

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“The flattening of the [yield] curves has been exacerbated by these flows,” said Stefano Di Domizio, head of fixed-income strategy at Absolute Strategy Research.

To be sure, all this hedging activity might have helped yields in the U.S. and Europe to fall more quickly to a level where they will eventually deserve to be. “It’s the middle of August, it’s quiet, so moves get exaggerated,” says Helen Anthony, a portfolio manager at Janus Henderson. “We were expecting this to play out over much longer than just this month.”

Stock Markets: New U.S.-China Tariffs add to Global Gloom

Trump Dismisses Recession Fears

Bond Market Recession Signal …

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Uk House Prices: British House Prices Rose in August

British house prices rose in August at the fastest annual pace in three months, mortgage lender Nationwide said on Friday, adding to tentative signs the housing market has picked up from its recent pre-Brexit slowdown.

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House prices rose 0.6% year-on-year after a 0.3% rise in July, Nationwide said. On the month, prices were flat. British house price growth has sagged since the 2016 Brexit referendum – especially in London and neighboring areas – but at a national level the market appears to have stabilized, surveys suggest.

“With the economy struggling and the outlook currently highly uncertain, we suspect that house prices will remain soft despite the recent pick-up in housing market activity – which could well prove temporary,” said Howard Archer, chief economist adviser to the EY ITEM Club consultancy.


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He added that he expected house price growth of just 1.0% for 2019 as a whole, using Nationwide’s measure.

On Tuesday, industry body UK Finance said British banks last month approved the most mortgages since February 2017. Official figures from the Bank of England are due at 08:30 GMT.


Goldman Sachs Says Dragged-Out Brexit Is Doing Deeper Damage To UK Economy

Stock Market News Today — Britain’s protracted divorce from the European Union is hurting the world’s fifth largest economy as dwindling company investment, signs of a looming labor market shock and poor productivity hinder growth, Goldman Sachs (NYSE:GS) said. The United… Read More ›

Chinese Investors Have Pulled Back Sharply From The U.S. Real Estate Market

◊ U.S. Real Estate Market News ◊ ♦ Stock Market News ♦ … — Home sales are hurting. Even with lower mortgages rates and a sales pickup in July, purchases of homes are still down significantly compared with those of 2018…. Read More ›

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Chinese Investors Have Pulled Back Sharply From The U.S. Real Estate Market

◊ U.S. Real Estate Market News ◊

♦ Stock Market News ♦ … — Home sales are hurting. Even with lower mortgages rates and a sales pickup in July, purchases of homes are still down significantly compared with those of 2018.

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But while analysts typically cite high prices and growing worries about a possible recession, another factor is also playing a prominent role: Foreign buyers, particularly the Chinese, have pulled back sharply from the U.S. real estate market.

Foreign investors purchased $77.9 billion in residential property in the 12 months ending in March, down 36% from the previous 12-month period, the National Association of Realtors said in a recent report.

China, meanwhile, topped all other countries for the seventh consecutive year, with $13.4 billion in home purchases, but that was down a whopping 56% from the prior year, NAR said. About half those sales were all cash, down from 58% a year earlier. The next largest international buyers – Canada, India and the United Kingdom – also had big drops, but they represent smaller shares of the market.

“The magnitude of (China’s) decline is quite striking, implying less confidence in owning a property in the U.S.,” says Lawrence Yun, chief economist of NAR. All told, existing U.S. home sales are down about 3% so far this year from the same period in 2018 despite a 2.5% increase in July from the prior month, NAR figures show.


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A big reason Chinese investors are retreating from the American housing market is that Beijing has placed tight limits on how much capital can leave the country in the wake of a devaluation in the yuan a few years ago.

“In China, each family member has been restricted to $50,000 or less,” says Steven Ho, senior loan officer at Quontic, a New York City-based bank. That makes it tougher for Chinese investors to elbow out American buyers with all-cash offers. “A few years before, these restrictions were not so stringent.”

The government toughened capital controls last year as the Chinese economy weakened, Ho says. Also, China’s slowing economy itself has dampened the confidence and purchasing appetite of Chinese buyers, Yun says. The Trump administration’s trade war with China, he says, has further chilled investment in U.S. housing.

Meanwhile, more Chinese homeowners have been selling their American houses and condos because they can’t pay the maintenance costs with their money trapped in China, says Jeff Lu, vice president of Fidelity National Title Insurance Company.

California feeling the effects… California is the epicenter of Chinese residential investment in the U.S., with 34% of purchases in the state. Other significant hubs are New York, New Jersey, Florida and Texas.

In Irvine, population 280,000, “there are 65,000 houses… and 21,000 of them are owned by Chinese.” Lu of Fidelity National says. “It’s normal for Chinese buyers to raise the price aggressively,” says Phil Lee, a broker at Keller Williams in Irvine. “For example, a $1.2 million house, they pay $1.22 million, all in cash.”

In recent years, Chinese investors made about half of all home purchases in the city, but that share has fallen to about 36% in 2019, Lu says. The pullback is depressing prices. In the first half of the year, the median home sale price in Irvine fell to $820,000 from $834,000, according to Zillow.

“It’s good news for local Americans who are looking to buy a home – larger supply and less competitors,” Lu added.

Many of the wealthy leave market… The drop-off in Chinese investors has especially affected the upper end of the market. After decades of economic growth, China has created a class of nouveau riche, many of whom want to buy U.S. homes as a solid investment or as a home for their children who attend American colleges.

“The wealthy Chinese see the U.S. as a safe harbor to park their money, and also an ideal place for their children’s education,” says Lin Pan, the founder of Lin Pan Realty Group, a Chinese real estate brokerage in Long Island, New York.

“The first batch of Chinese who came into the American housing market were entertainment stars, and then high-level Chinese officials and their families, businessmen and middle-class families,” says Chole Ren, an independent real estate broker in New York City.

“They specifically fly over here to view the houses,” says Xiang Jill Ji, a broker with Douglas Elliman Real Estate in New York. “The condos in midtown Manhattan used to be one of their favorite choices because they’re brand new, with the best view and positive valued-added space,” Ji said. But at a recent open house, few Chinese shoppers showed up, she says.

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More turn to mortgages… With China’s limits on cash that can leave the country, Chinese buyers are now searching for lower-priced homes and using mortgages more often. The share of their home purchases that rely on mortgages has risen to 46% in the 12 months ending in March, from 37% the prior year, according to NAR. And more of the buyers are middle-class.

The Chinese buyers are also downsizing. Ji has a Chinese client who wanted to buy a two-bedroom condo in Manhattan earlier this year but is now looking for a one-bedroom or studio. At the same time, brokers are seeing a growing number of homebuyers from Hong Kong due to the political crisis in the city, New York brokers Pan and Ji say. “Hong Kong buyers could be the next source of growth,” Pan says.






U.S. Mortgage Debt Hits Record

◊ U.S. Mortgage Debt 2019 ◊


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◊ Business & Financial News – Stock Market News Today ◊ — U.S. mortgage debt reached a record in the second quarter, exceeding its 2008 peak as the financial crisis unfolded.

Mortgage balances rose by $162 billion in the second quarter to $9.406 trillion, surpassing the high of $9.294 trillion in the third quarter of 2008, the Federal Reserve Bank of New York said Tuesday.

Mortgages are the largest component of household debt. Mortgage originations, which include refinancings, increased by $130 billion to $474 billion in the second quarter. The figures are nominal, meaning they aren’t adjusted for inflation.

“The big picture is that when you look at mortgages, which is the biggest piece of [household debt], it still looks pretty healthy,” said Michael Feroli, chief U.S. economist at JPMorgan Chase, noting that while household debt has grown, so have incomes.


The milestone for mortgage debt has been long in the making. Americans’ mortgage debt dropped by about 15% from the 2008 peak to the trough in the second quarter of 2013 and has climbed slowly since then.

Total household debt has been on the rise since mid-2013. It rose by 1.4% from the first quarter to $13.86 trillion, the 20th consecutive quarter of increase.

Still, the household debt picture is much different in 2019 than it was 11 years ago, since lending standards are tighter and less debt is delinquent today.

The second quarter saw a steep drop in the 30-year mortgage rate, which boosted borrowers’ incentive to take out a mortgage or refinance. The average rate on a 30-year fixed-rate mortgage dropped below 4% in May for the first time since early last year.

“What’s more interesting is when you look at the service burden, we don’t have more debt,” said Diane Swonk, chief economist at Grant Thornton.

Still, the housing market has been crimped by low inventory and high prices. Home prices hit a new nominal peak in September 2016 and have continued to climb since then.

Alongside higher home prices, a factor behind rising mortgage debt balances in the second quarter could be homeowners tapping into home equity for cash when they refinance.

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Refinancing accounted for about half of new mortgages in the second quarter, according to Guy Cecala, chief executive at Inside Mortgage Finance, an industry research group.

That represents a “mini refinancing boom” since the refinancing share of new mortgages was about 30% in 2018, when rates were rising, Mr. Cecala said.

Borrowers who refinanced in the second quarter and chose the option to cash out withdrew an estimated $17.5 billion in equity out of their homes, according to Freddie Mac, a mortgage-finance company. While that was $2.1 billion higher than the second quarter of last year, it remains well below the prerecession peak of $84 billion cashed out in the second quarter of 2006.

“American homeowners are being very prudent in liquidating home equity,” said Sam Khater, Freddie Mac’s chief economist, citing the scars of the last recession.

Mortgages remain the largest form of household borrowing but have become a smaller share of total debt since the late 2000s as consumers take on more automotive and student loans.

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Despite the higher debt loads, Americans appear to be keeping up with their payments. The report found that 95.6% of balances were current, the highest level of the current expansion.

In the second quarter, Americans continued to borrow more for cars and their credit-card balances rose, although student debt declined slightly.

Outstanding student loan debt was $1.48 trillion in the second quarter, down $8 billion from the first quarter of this year. Student loan balances typically decline or stagnate in the second quarter before picking up in the third at the start of the academic year.

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German Economic Sentiment Tumbles To Lowest Level Since 2011

• German Economy – Stock Market News Today •

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Expectations for the German economy have slumped to their lowest level since the eurozone debt crisis eight years ago amid deepening concerns over the US-China trade dispute and the potential for a chaotic UK exit from the EU.

The Zew survey of financial market experts revealed on Tuesday that economic sentiment in August had dropped to minus 44.1, its lowest since December 2011 and much gloomier than estimates from analysts in a Reuters poll who had predicted it to be minus 28.5. The index had come in at minus 24.5 in July.

The experts polled showed that current conditions for the month were minus 13.5, down from minus 6.5 in July and worse than the predicted minus 7.

Turmoil in the country’s carmaking industry, the US-China trade spat and the prospect of a messy no-deal Brexit at the end of October have taken their toll on the export-orientated economy.

The poll points to a “significant deterioration in the outlook for the German economy”, said Achim Wambach, president of Zew. “The most recent escalation in the trade dispute between the US and China, the risk of competitive devaluations and the increased likelihood of a no-deal Brexit place additional pressure on the already weak economic growth. This will most likely put a further strain on the development of German exports and industrial production.”

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Tuesday’s figures show the fifth consecutive monthly decline in the respected poll, while apart from April this year the indicator has shown negative figures since March 2018. The index has been below its long-term average of 21.8 points for three years since September 2015.

Quarterly gross domestic product figures, due on Wednesday, are expected by the Bundesbank and a Reuters poll of analysts to show that the German economy shrank 0.1 per cent in the three months to June. GDP in the first quarter had expanded 0.4 per cent while second-quarter eurozone growth came in at 0.2 per cent.

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“The financial market experts’ sentiment concerning the economic development of the eurozone also experienced a significant drop, bringing the indicator to a current level of minus 43.6 points, 23.3 points lower than in the previous month,” the survey said on Tuesday. The indicator for the current economic situation in the eurozone fell 3.9 points to a level of minus 14.5 points in August.






China’s Exports Unexpectedly Rise in July

◊ China Exports 2019 – Stock Market News Today ◊


The Asian economic giant said its U.S. dollar-denominated exports in July rose 3.3% from a year ago while imports fell 5.6% during the same period. The country’s overall trade surplus last month was $45.06 billion, according to customs data.

China’s trade surplus with the U.S. was $27.97 billion in July, lower than the previous month’s $29.92 billion, the data showed. From January to July, China’s trade surplus with the U.S. has totaled $168.5 billion.

Lu Yu, a portfolio manager at Allianz Global Investors, said a weaker Chinese yuan versus the U.S. dollar and other currencies has helped Chinese manufacturers to sell their goods overseas. That’s despite the U.S. imposing 25% tariff on $200 billion of Chinese goods in May after trade negotiations stalled.

The depreciating yuan “is helping the exporters in China to export not just to the U.S. because it dampens the impact of the tariff hike, but also help them to export to other countries,” she told CNBC’s “Street Signs” on Thursday.

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Unlikely US and China will resolve tensions before 2020 election: Strategist
Economists polled by Reuters had expected Chinese exports lasts month to fall by 2% from a year ago, and imports to decline by 8.3% compared to the same period last year. The country’s overall trade surplus in July was forecast to be $40 billion, according to the Reuters poll.

In June, exports from China fell 1.3% year-on-year while imports fell 7.3% over the same period, customs data showed. Trade surplus that month was $50.98 billion, according to the data. Outlook for China… The trade momentum seen in July may not last, said Julian Evans-Pritchard, senior China economist at consultancy Capital Economics.

“Looking ahead, exports still look set to remain subdued in the coming quarters as any prop from a weaker renminbi should be overshadowed by further US tariffs and broader external weakness,” he wrote in a note after China’s trade data release.

“Though August exports may benefit from some front-loading before the new tariffs go into effect on September 1st, this bump will probably be smaller than it was ahead of earlier rounds of tariffs as US port storage facilities have little spare capacity,” he added. “Meanwhile, a renewed slowdown in domestic demand looks set to weigh on import volumes.”

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Fmr. US Treasury Sec. Jack Lew on China’s devaluation of the yuan… The Chinese economy — the second largest in the world — is growing at a slower pace amid an escalating trade battle between Beijing and Washington that started as a tariff war but recently spilled into technology and currency. Last month, China said its economy grew 6.2% in the second quarter from a year ago — the weakest rate in at least 27 years.

Beijing has eased monetary policy and introduced fiscal measures such as tax cuts to boost economic activity. But growth in the Asian economic giant could slow down even more if the administration of U.S. President Donald Trump goes ahead with new elevated tariffs next month.

Trump last week threatened to slap 10% tariffs on $300 billion of Chinese goods starting Sept. 1, which Citi analysts have said would slash China’s exports by 2.7% and drag down growth by 50 basis points. That’s in addition to the economic harm China has already experienced after the U.S. slapped 25% tariffs on $250 billion of Chinese goods.

Following Trump’s latest tariff threat, China allowed its currency — the yuan — to weaken below an important threshold of 7 per U.S. dollar. That led the U.S. to label China a currency manipulator, which analysts have said marked another escalation in tensions between the two countries.





U.S. Agriculture

◊ U.S. Agriculture News — Stock Market News Today ◊

China is the fourth largest market for U.S. farm exports, behind Canada, Mexico and Japan. Former Iowa Lt. Gov. Patty Judge said the loss of a trading partner like China sets up a “dangerous situation.” …  With China officially pulling out of buying U.S. agricultural products, American farmers are losing one of their biggest customers. It could be a devastating blow in an already tough year for crops and commodity prices. It may also dent U.S. gross domestic product and hurt companies like Deere, whose business is directly tied to farming in the Heartland.

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“Sales have already been lower this crop year because of the existing tariffs. If we went all the way to no China exports whatsoever, that would of course result in even larger market and price impacts,” said Pat Westhoff, director of the Food and Agricultural Policy Research Institute at the University of Missouri. “Cutting China completely out of the market would be a very big deal.”

China made up $5.9 billion in U.S. farm product exports in 2018, according to the U.S. Census. It’s the world’s top buyer of soybeans and purchased roughly 60 percent of U.S. soybean exports last year. Westhoff estimated that soybean prices have already dropped 9% since the trade war began last July. From September 2017 to May 2018, soybeans exports to China totaled 27.7 million tons. That number dropped by more than 70% to 7 million tons during the same nine-month period in 2018 and 2019, according to an analysis by University of Missouri.

Westhoff estimated an additional $4 billion drop on soybean exports after the effects of tariffs but before the total loss of China as a customer. Tariffs also have a ripple effect across other crops, he said. With less demand for soybeans, farmers end up planting more crops like corn. That results in lower corn prices because there’s much more supply.

Former Iowa Lt. Gov. Patty Judge said the loss of a trading partner like China sets up a “dangerous situation.” … “There are going to be some serious repercussions for farmers,” Judge said.

China is the fourth largest market for U.S. farm exports, behind Canada, Mexico and Japan. She also highlighted a “languishing” trade pact with Canada and Mexico that has yet to be signed. New tariffs are another “financial whammy on top,” said Judge, who was also Iowa’s secretary of Agriculture.

While farming exports are a relatively small portion of the United States’ annual $20 trillion in GDP, Judge said it will directly hit farmers and exacerbate other problems they were already facing.

U.S. net farm income has been falling in the past six years, well before the effect of tariffs. Income has dropped 45 percent since a high of $123.4 billion in 2013 to about $63 billion last year, according to the U.S. Department of Agriculture.

In addition to tariffs, farmers were faced with floods and African swine fever this year, which has softened demand for soybean and farm products that pigs feed on. The White House began rolling out a $16 billion federal aid package in May to help farmers weather the trade war and other circumstances. But Judge said much of that bailout has skipped over small farmers and isn’t widely embraced as a permanent solution — at least in Iowa.

“Farmers want to have a fair profit at the end of the year— they would like to do that in the marketplace rather than through a government program,” Judge said, adding that it’s also difficult for small farmers to get access to loans if they don’t have certainty of customer demand to pay it off.

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On Tuesday, President Trump tweeted that farmers know that China “will not be able to hurt them,” since “their President has stood with them.”

Election issue… Agriculture has been a sensitive issue for President Donald Trump. He claimed he had secured large quantities of agricultural purchases when he met with President Xi Jinping at the G-20 summit in June, then later accused China of not following through with those purchases. That led Trump to announce last week 10% tariffs on the remaining $300 billion in Chinese imports that had escaped his previous duties.

On Monday, a spokesperson for the Chinese Ministry of Commerce said Chinese companies have stopped purchasing U.S. agricultural products in response to Trump’s surprise tariffs. “This is a serious violation of the meeting between the heads of state of China and the United States,” the ministry said in a statement Monday, as translated via Google.

John Rutledge, chief investment officer of global principal investment house Safanad, said it’s no mistake that agriculture was China’s weapon of choice in upping the trade war ante. On one hand, It hurts GDP and Trump’s political base of small farmers — but perhaps more importantly, it hurts corporate farming companies that tend to be huge Republican donors.

“Clearly this was retaliatory,” Rutledge said. “It’s a really serious area to go after.” Rutledge, who said he has met with the Trump administration’s core trade team on multiple occasions this year, said Trump “cannot allow the trade war to end before the next election” because of its political value.

China’s end to agricultural buying may also hurt sales at U.S. companies like Deere and Caterpillar, which rely on farmers for much of their business. Deere said in May that farmers were delaying buying products based on uncertainty. Shares of Moline, Illinois-based Deere dropped 4.8% Monday after reports that China would stop buying U.S. farm products.

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Judge pointed to the farm crisis in the 1980s, when low crop prices led to farm operators falling behind on land and equipment loans. Based on few signs of progress in trade talks, Judge said she fears a repeat of the painful decade for farmers.

“We don’t want to see people losing their farms and people unable to meet your financial obligations,” she said. “But it doesn’t look like trade is going to get any better, so I think we’re in for a very rough ride.”

German Output Figures Propel Recession Fears

◊ Germany Recession 2019 — Stock Market News Today ◊

German industrial output fell more than expected in June, Industrial output dropped by 1.5% on the month – a far steeper decline than the 0.4% fall that had been forecast, figures released by the Statistics Office showed on Wednesday.

The continued plunge in production is scary,” Bankhaus Lampe economist Alexander Krueger said, adding that a recession in the manufacturing sector was likely to continue due to the escalation of the trade dispute between China and the United States.

Both countries are important export destinations for German companies, which means that the tit-for-tat tariff dispute between the world’s two largest economies is also having a disproportionately large impact on Germany.

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“The longer this continues, the more likely it is that other sectors of the economy will be dragged into this. Growth forecasts for Germany are likely to be trimmed further,” Krueger said.

In the second quarter as a whole, industrial output fell by 1.8% on the quarter, driven by steep drops in metal production, machinery and car manufacturing, the economy ministry said.

“Industry remains in an economic downturn,” the ministry said. Production in construction fell 1.1% in the second quarter while energy output dropped 5.9% in the same period.

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PRELUDE TO RECESSION?… The figures came after German industrial orders on Tuesday exceeded expectations in June, but the economy ministry cautioned that this sector of the economy had not yet reached a turning point.

“This supports our expectation that the German real GDP shrank slightly in the second quarter,” Commerzbank economist Ralph Solveen said on the industrial output figures.

“Despite the increase in orders reported yesterday, the downward trend in production is likely to continue in the coming months, so that manufacturing remains the weak spot of the German economy.”

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The German economy is widely expected to have at best stagnated in the second quarter, and sentiment indicators suggest it could shrink in the third as exporters are hit by trade disputes, Brexit uncertainty and a slowing world economy.

The German government expects the economy to grow by a meager 0.5% this year and rebound with a 1.5% expansion in 2020.

Andreas Scheuerle from DekaBank said the industrial data suggested the economy contracted by 0.2% in the second quarter after expanding by 0.4% in the first three months of the year.

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“We assume that this is the prelude to a technical recession,” Scheuerle added. A technical recession is normally defined as at least two quarters of contraction in a row.

The Federal Statistics Office will release preliminary gross domestic product figures for the April-June period next Wednesday.



Easy Loans: Consumer-Lending Boom Sparks Fears Of Recession

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StockMarketNews.Today > …  More ordinary Russians have come to depend on easy loans to purchase goods, maintain a certain living standard or simply to survive…

As real disposable income for Russians continues to fall—it declined each year between 2013 and 2018—personal consumer lending has exploded, topping around $130 billion last year, up 46% compared with 2017, according to the Moscow-based United Credit Bureau, which tracks credit histories on 90 million Russian borrowers. Most of Russians’ debt is due to a surge in unsecured cash loans, the country’s central bank said.

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Interest rates on bank loans range from 12% to 19%, depending on the length of the loan, according to data from Russia’s central bank. But commercial or nonprofit lending institutions other than banks often gouge borrowers with interest rates that can hit more than 500%, according to local financial experts.


Russian officials worry the borrowing boom could further undermine the country’s financial stability. Western sanctions on Moscow and low oil prices, on which the economy heavily depends, have dented Russia’s economy, weakened the ruble and compounded already sluggish growth. Nearly 13% of Russians live in poverty, according to government data.

Russian President Vladimir Putin warned in June that banks were giving out loans to people whose repayments amount to 40% of their wages, fueling a possible bubble. Maxim Oreshkin, the country’s economy minister, projected the bubble would burst and drag the country into recession if lending isn’t tamed by the Russian central bank. “Our estimate is that 2021 is the year when [the consumer-lending problem] will blow up,” he told the local Ekho Moskvy radio station in July.

Russians hold an average of nearly 290,000 rubles, or $4,600, in debt, according to United Credit Bureau. This is a meager sum compared with the U.S., where the average personal debt is roughly $38,000, excluding mortgages, according to Northwestern Mutual, a financial-services organization. But the average monthly Russian salary is around $670. About 44% of Russian households are indebted, according to the central bank, up from 34% two years ago. One in eight Russian borrowers spends more than 50% of their income on loan payments.

The “consumer-lending boom is negatively impacting especially the lives of those who earn a low level of income,” Mr. Oreskhin said in a Wall Street Journal interview. “It’s a big problem.”


Elvira Nabiullina, Russia’s central-bank governor, disagrees that consumer lending is creating a bubble and insists the debt boom is under control. But beginning in October, the central bank will require credit institutions to calculate borrowers’ income and their debt burden before granting new loans—something many lenders don’t do now. The Economy Ministry is also weighing measures to support people who can’t pay their debt.

Some bank representatives said consumers sometimes lack financial literacy and need extra guidance, which they provide.

Defaulting after accepting unmanageable loans is pushing many Russians to file for bankruptcy under a new personal-bankruptcy law that came into force in 2015. The law covers those with a total debt of more than 500,000 rubles and more than three months of missed payments. In the first half of this year, 29,000 people filed for bankruptcy, 1.5 times higher than during the same period a year ago, according to the United Credit Bureau.

Extra: The Russian Central Bank Plans To Lower The Key Interest Rate In Small Steps

The central bank embarked on a monetary easing cycle last month, lowering the cost of lending amid sluggish economic growth and abating inflationary risks. Analysts expect further rate cuts but there is no consensus on their scale and timing.

At its last board meeting in June, the central bank considered holding the key rate and cutting it by 50 basis points but eventually trimmed it by 25 basis points to 7.50%, Nabiullina said.

“Other things being equal, we are trying to move in moderate steps for the economy to adapt to our new decisions,” she said in an interview with Reuters cleared for publication on Wednesday.

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Under its baseline scenario, the central bank, which aims to keep consumer inflation at its 4% target, plans to complete its monetary easing cycle by mid-2020, Nabiullina said.

Russia’s monetary policy will become neutral once the key rate reaches a range of 6% to 7%, she added. Expectations of further rate cuts have boosted demand for Russian OFZ treasury bonds this year. Rate cuts drive bonds’ yields down, which inversely send their prices higher.

Nabiullina said inflows of foreign funds into OFZ bonds have not caused the market to overheat, while volatility in capital flows do not constitute a risk because of Russia’s low state debt. Russia’s debt currently stands at less than 15% of gross domestic product (GDP).

“We have tools to mitigate the implications of spikes in volatility for financial markets and the economy,” she said.

RISK SCENARIO… In its latest monetary policy report published last month, the central bank added to its risk scenario a probability of a drop in prices for oil, Russia’s key export, to just $20 per barrel.

“In order to bring the risk scenario closer to real situations, we have priced in an option in which oil prices fall sharply for a short time before increasing to some extent and stabilizing,” Nabiullina said. Seeking to avoid such a scenario and prop up the price of crude, OPEC and its allies led by Russia agreed to extend oil output cuts until March 2020 on Tuesday.

“The main factor behind the oil prices drop in this scenario is the slowdown of the global economy,” she said, adding that such a scenario was unlikely.

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Asked about the trade war between China and the United States that has been fuelling concerns about the global economy for months and rattling emerging market currencies, Nabiullina said she did not expect the dispute to be resolved soon.

STRONGER ROUBLE… The Russian rouble could firm if the government proceeds with its plan to uncork the National Wealth Fund, now at around $60 billion, and start using it once it reaches 7% of GDP, a level it is expected to reach next year, Nabiullina said.

“This could lead, for example, to the rouble firming in a structural manner and to its stabilization at a new level,” Nabiullina said without elaborating on the rouble exchange rate. Nabiullina said the fund’s spending should be economically feasible, reiterating her call for the 7% threshold to be re-examined and possibly raised.

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BANKING SECTOR WATCH… The central bank has shut dozens of commercial banks in the past few years as part of a program to clean-up the banking sector, helping increase its sustainability.

Russian banks are on track to post a higher net profit this year than the 1.3 trillion rubles ($20.6 billion) they made in 2018, Nabiullina said. “We have largely solved the issue of laundering of illegal incomes through the banking system. But now we need to constantly be vigilant for this operation not to come back.”

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In addition to shutting smaller lenders, the central bank has bailed out a handful of major banks, including Otkritie, B&N and Promsvyazbank.

Nabiullina said the central bank now needs to prepare the rescued lenders to be sold on the market and to be converted into banks with a large free float of shares. ($1 = 63.2400 rubles)

Economic Growth Slowed In Second Quarter

U.S. economy slowed but still grew at a solid clip in the second quarter, gross domestic product, a broad measure of goods and services produced across the economy, rose at a 2.1% annual rate in the second quarter, adjusted for seasonality and inflation, down sharply from a 3.1% pace in the first quarter, the Commerce Department said Friday.

Businesses took a more cautious approach in the second quarter, causing a key gauge of their investment to decline for the first time since early 2016. Nonresidential fixed investment—which reflects spending on software, research and development, equipment and structures—fell at a 0.6% rate, compared with a 4.4% rise in the first quarter.


One factor that generated uncertainty for businesses in the second quarter was the international trade situation, as the U.S. increased levies on Chinese goods and threatened, but didn’t implement, tariffs on Mexican imports.

Joe Baiz, president of Phoenix-based plastic-injection-mold manufacturer 4front Manufacturing, said business “slowed a little bit in the second quarter” as worries over trade policy generated “a lot of fear of the unknown.” Trade itself was a drag on growth, as exports fell at a 5.2% rate while imports rose slightly, expanding the deficit.

Shoppers picked up the slack however. Consumer spending, which accounts for more than two-thirds of the economy, rose at an inflation-adjusted annualized rate of 4.3% in the second quarter, up from its first-quarter pace of 1.1% and marking the strongest reading since late 2017.

“The simple proposition is that the trade war made manufacturing weaker and the tax cut made consumer spending stronger,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

The White House blamed the Federal Reserve for the growth slowdown. President Trump said on Twitter Friday morning that the 2.1% figure was “not bad considering we have the very heavy weight of the Federal Reserve anchor wrapped around our neck.”

Mr. Trump has criticized the central bank for holding interest rates steady so far this year and he has repeatedly called for rate cuts to boost growth.

Friday’s report is one of the last major readings of the economy’s temperature Fed officials will see before their policy meeting July 30-31. They are prepared to cut their benchmark interest rate by a quarter percentage point from its current range between 2.25% and 2.5% and signal more reductions to come to bolster the U.S. economy at a time of cooling global momentum.

The divergent signals from strong consumer spending and weakening business investment in the second quarter leave a mixed picture. The economy remains supported by low unemployment and rising incomes, but slowing global growth, a strong dollar and trade uncertainties are weighing on the outlook.

“Combine all those together and you have the kind of [GDP] report that justifies a rate cut,” said Gregory Daco, an economist at Oxford Economics. Mr. Daco likened a rate reduction now to a vaccination shot for the economy and said that “you want to keep looking at the patient as you get into the fall.”

Some companies have tempered their outlook for this year due to worries about U.S. trade policy. Materials-science company Dow Inc. this week reported a decline in profit and lowered its guidance for capital expenditures.

“The macro environment is cautious, largely driven by geopolitical volatility and prolonged trade negotiations which continue today,” Chief Executive Jim Fitterling said Thursday. Earnings for the S&P 500 appear to have grown in the second quarter at their most anemic pace since mid-2016.

Earnings per share are expected to rise just 0.5% over second-quarter 2018, according to an estimate from financial-data firm Refinitiv, which combines analyst estimates with actual results from the 44% of companies that have already reported.

Housing was a headwind for growth for the sixth quarter in a row as residential investment fell at a 1.5% annual pace, despite falling mortgage rates in the April to June period.

Businesses also drew down inventories in the second quarter rather than replenished stock shelves, which subtracted 0.85 percentage point from the quarter’s overall GDP growth rate.


Government spending boosted overall growth, rising at a 5.0% annual rate in the second quarter, though that was partly a rebound from the effects of the federal government shutdown that started in the fourth quarter and stretched into late January.

Many economists expect growth this year of around the 2.3% averaged during the current expansion, which started in mid-2009 and this month became the longest on record. Fed officials’ median projection in June was for 2.1% growth from the fourth quarter of 2018 to the fourth quarter of 2019.

The Number Of Americans Filing Applications For Unemployment Benefits Increased Moderately Last Week

< StockMarketNews.Today > … Initial claims for state unemployment benefits rose 8,000 to a seasonally adjusted 216,000 for the week ended July 13, the Labor Department said, remaining in the middle of their 193,000-230,000 range for this year. Last week’s increase in claims was in line with economists’ expectations.

The claims data tends to be volatile around this time of the year because of summer factory closures, especially in the automobile industry, which occur at different periods. This can throw off the model the government uses to strip out seasonal fluctuations from the data.

Layoffs remain low despite the U.S.-China trade tensions, which have contributed to a dimming of the economy’s outlook and led the Federal Reserve to signal it would cut interest rates at its July 30-31 meeting for the first time in a decade.

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Last week’s claims data covered the survey period for the nonfarm payrolls component of July’s employment report. Claims were little changed between the June and July survey periods, suggesting strong job growth this month. The economy created 224,000 jobs in June.

“Firms remain extraordinarily reluctant to lay off workers and the labor market remains extremely tight,” said John Ryding, chief economist at RDQ Economics in New York. “There is no reason to expect anything but a solid jobs report for the month.”

The dollar was steady against a basket of currencies, while U.S. Treasury prices fell. Stocks on Wall Street were lower.

WORKERS SCARCE… There are, however, concerns that a shortage of workers and the Trump administration’s tougher stance on immigration could impede job growth. The Fed’s Beige Book report of anecdotal information on business activity collected from contacts nationwide published on Wednesday showed some manufacturing and information technology firms in the Northeast reduced their number of workers from mid-May through early July.

It said “a few reports highlighted concerns about securing and renewing work visas, flagging this as a source of uncertainty for continued employment growth.”

Solid job growth is helping to underpin the economy, which is slowing as last year’s massive stimulus from tax cuts and more government spending fades. Weak manufacturing and housing, as well as a widening trade deficit are partially offsetting strong consumer spending.

The Atlanta Fed is forecasting gross domestic product rising at a 1.6% annualized rate in the second quarter. The economy grew at a 3.1% pace in the January-March period.

The slowdown in activity was underscored by a second report on Thursday from the Conference Board showing its measure of future economic growth fell for the first time in six months in June. The 0.3% drop in the leading indicator, the largest since January 2016, “suggests growth is likely to remain slow in the second half of the year,” the Conference Board said.


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But manufacturing appears to be improving. In a third report, the Philadelphia Fed said its business conditions index jumped to a reading of 21.8 in July from 0.3 in June.

That was the highest level since July 2018 and reflected strong increases in measures of new orders, employment and shipments. The improvement in manufacturing in the region that covers eastern Pennsylvania, southern New Jersey and Delaware mirrors other measures on factory activity.

It probably overstates the outlook for manufacturing, however. A survey from the New York Fed on Monday showed a mild rebound in its business conditions index in July after contracting in June.

While overall manufacturing production increased last month, output at factories fell at a 2.2% annual rate in the second quarter, the sharpest decline in three years, the Fed reported on Tuesday. Manufacturing production dropped at a 1.9% pace in the first quarter. “The troubles that have plagued industry continue to linger,” said Roiana Reid, an economist at Berenberg Capital Markets in New York.

The Philadelphia Fed survey’s measure of prices received by manufacturers in the mid-Atlantic region increased this month, as did a gauge of prices paid by factories. Both measures, however, remained well below their lofty readings over the past few month, consistent with expectations of moderate inflation.

The survey’s six-month business conditions index jumped to a reading of 38.0 this month, the highest reading since May 2018, from 21.4 in June. Its six-month capital expenditures index increased to 36.9 from a reading of 28.0 in the prior month.


U.S. Housing Starts Fall… Permits Hit Two-Year Low

StockMarketNews.Today — U.S. homebuilding fell for a second straight month in June and permits dropped to a two-year low, suggesting the housing market continued to struggle despite lower mortgage rates.

Housing starts decreased 0.9% to a seasonally adjusted annual rate of 1.253 million units last month as a rebound in the construction of single-family housing units was offset by a plunge in multi-family homebuilding, the Commerce Department said on Wednesday.

Data for May was revised slightly down to show homebuilding falling to a pace of 1.265 million units, instead of slipping to a rate of 1.269 million units as previously reported.

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Economists polled by Reuters had forecast housing starts dipping to a pace of 1.261 million units in June.

Single-family homebuilding, which accounts for the largest share of the housing market, increased 3.5% to a rate of 847,000 units in June, partially recouping some of May’s sharp drop. Single-family housing starts fell in the Northeast, but rose in the Midwest, West and South.


Building permits tumbled 6.1% to a rate of 1.220 million units in June, the lowest level since May 2017. Permits have been weak this year, with much of the decline concentrated in the single-family housing segment.

The housing market hit a soft patch last year and has been a drag on economic growth for five straight quarters. It likely subtracted from GDP in the second quarter.

The sector is being hamstrung by land and labor shortages, which are making it difficult for builders to fully take advantage of lower borrowing costs and construct more affordable housing units. As a result, the housing market continues to struggle with tight inventory, leading to sluggish sales growth.

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The 30-year fixed mortgage rate has dropped to about 3.75% from a peak of 4.94% in November, according to data from mortgage finance agency Freddie Mac. Further declines are likely as the Federal Reserve has signaled it would cut interest rates this month for the first time in a decade.

A survey on Tuesday showed confidence among homebuilders increased in July. Builders, however, complained “they continue to grapple with labor shortages, a dearth of buildable lots and rising construction costs that are making it increasingly challenging to build homes at affordable price points relative to buyer incomes.”


Permits to build single-family homes rose 0.4% to a rate of 813,000 units in June. Despite the increase last month, permits continue to lag housing starts, which suggests single-family homebuilding could remain sluggish.

Starts for the volatile multi-family housing segment dropped 9.2% to a rate of 406,000 units last month. Permits for the construction of multi-family homes plunged 16.8% to a pace of 407,000 units.

Australian Economy Stuck In Sub-Par Growth


Australia may be destined for another two years of sub-par economic growth as debt-laden households keep their wallets shut tight, though analysts are hopeful lower interest rates and tax handouts would help it dodge a recession.

Economists polled by Reuters forecast Australia’s A$1.9 trillion ($1.3 trillion) of annual gross domestic product (GDP) would expand 2.1% in 2019, down from predictions of 2.2% in the previous poll and 2.7% early in the year.

Growth was seen picking up modestly to 2.5% in 2020 and 2.6% the year after, though that would still be short of the 2.75% that is considered trend. The best that could be said was no analyst forecast a recession, with the lowest GDP forecast being 1.0% for 2020.

A run of poor quarters has already seen annual growth slow to its lowest in a decade at just 1.8% as falling house prices and sluggish wages dragged on consumer spending.

The Reserve Bank of Australia (RBA) has reacted by cutting interest rates twice in as many months, taking them to an historic low of 1%, while regulators have eased rules on home loans to free up a log jam in bank lending.

Early signs are this has steadied home prices in the long-suffering housing markets of Sydney and Melbourne. Many Australians will also be getting a tax giveaway from this month, which could flow through to consumption.

“We do not see this package as a game changer for consumption given it first comes as a rebate and subsequent tax cuts come with a considerable delay,” said Westpac senior economist Elliot Clarke.

“However, in combination with RBA rate cuts, the tax measures should at least stabilize growth, laying a foundation from which a hoped-for acceleration in infrastructure investment could drive growth back to trend.”

Plenty of risks remain, however, including the threat of an all-out trade war between the United States and China, the latter being Australia’s single biggest export market.


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At home, leading indicators of labor demand have also softened recently and threaten a downturn in what has been one of the strongest sectors of the economy. At least there is plenty of scope for stimulus with core inflation down around 1.5%, having run below the RBA’s 2-3% target band for more than two years now.

Even after the recent rate cuts, the poll showed analysts expected headline inflation of just 1.6% for all of this year, rising slowly to 2.0% in 2020 and 2.2% 2021.

German Efficiency Has Taken A Hit This Year…

In the past week, Deutsche Bank AG abandoned its global ambitions and initiated layoffs, the chief executive of BMW AG said he would step down and sharp profit warnings from Daimler AG and BASF SE rattled markets.

That news followed the continuing legal woes facing Bayer AG for its acquisition of Monsanto, the maker of weedkiller Roundup, and continued fallout for auto makers from the diesel-emissions scandal and depressed global new car sales. Meanwhile, German blue chips from software maker SAP SE to industrial giant Thyssenkrupp AG have announced a combined tens of thousands of job cuts this year.

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One in three large public companies in Germany’s DAX index have reported profit warnings, job cuts or restructurings, or are dealing with legal disputes or investigations from authorities. More firms based here are slipping from the rankings of the most valuable global companies, leading consulting firm Ernst & Young to conclude this month that “German companies are losing their importance.”

Some companies are facing unique challenges, but broader trends are also affecting them. Contributing to the nation’s woes, analysts say, are the effects of global trade disputes on Germany’s export-oriented economy, increased pressure to digitize and a degree of complacency after years of robust growth.

“There is a crisis at the moment, the German economy was so good for such a long time, people thought we’d go on and go on and go on,” said Markus Schön, managing director of DVAM Asset Management in Detmold, Germany.

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The economy grew just 0.7% in the 12 months through March, far behind others in the eurozone, and earlier this year Berlin slashed its forecast for 2019 growth domestic product to 0.5% from 1.8%. “German companies were not prepared for this situation,” Mr. Schön said.

Key among them are the German auto makers, which were hit by a collapse in demand for diesel vehicles and a global slowdown in car sales as they are spending heavily on electric and autonomous vehicle development.

Both BMW and Daimler lowered their financial guidance this year and the latter—maker of Mercedes-Benz luxury vehicles—issued two profit warnings in the last three weeks, while Volkswagen AG said it would cut 7,000 jobs. In turn, the difficulties of large car makers have filtered down through the network of smaller suppliers and service providers whose fortunes are directly tied to the sector’s health.

Volkswagen has also struggled to move beyond an emissions-cheating scandal that first surfaced in 2015. In March, the U.S. Securities and Exchange Commission sued the auto maker and former Chief Executive Martin Winterkorn for defrauding U.S. investors. And a month later, German prosecutors indicted Mr. Winterkorn and four others for fraud.

Other German firms say their problems are closer to home. Last month, days after issuing a profit warning attributed to aggressive competition from European low-cost carriers, Deutsche Lufthansa AG Chief Executive Carsten Spohr said the airline had made missteps navigating the local short-haul market, including efforts to capitalize on the 2017 bankruptcy of ex-rival Air Berlin.

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“Did we underestimate the complexity? We did,” he said. In an effort to reassure investors, Mr. Spohr reasserted the company’s commitment to being dependable and efficient. “In the end, we’re boring. We’re German.”

Another factor behind Germany’s corporate troubles is the country’s legally mandated board structure, which flanks the management board with a powerful supervisory board, half of whose members represent workers. While such checks and balances have helped maintain labor peace at large companies, they can also inhibit quick decision-making and discourage risk-taking.

“On the one hand, it can be an advantage to have a strong CEO, who can react quickly in times of crisis,” said Christian Lawrence, a partner at Brunswick Group in Munich. “Whereas if you have a German system, the CEO is one of many making decisions and there must be consensus for things to be done.”

Hubert Barth, chief executive of Ernst & Young Germany, said some German blue chips are stumbling over “the transformation of the economy toward more digitized business models.”

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On the surface, German companies and the government are adamant about their commitment to digitization. This week, German economics minister Peter Altmaier traveled to Silicon Valley to meet with executives from Alphabet Inc. ’s Google, Apple Inc. and others, part of a continuing effort to raise Germany’s profile in digital industry.

There is a pervasive feeling, analysts and executive say, that German companies can’t keep up with the large tech giants from the U.S. and elsewhere. This is also partly attributable to strong limitations that German and European privacy laws put on companies’ ability to collect, store and monetize user data.

“Tell me one company in Germany which is playing a role in platforms, the area of Facebook and Amazon,” said Mr. Barth of Ernst & Young. “There’s no obvious German company that plays a significant role.”

At an internal Bertelsmann SE meeting in May, executives from across the media conglomerate presented their strategies for working with, and competing against, American tech firms.

“We will never be able to gather the same amount of data as Google, Facebook or Amazon,” said one executive at the meeting. “This is a fact, and we just have to deal with it. They are on their own planet.”

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Troubles at Germany’s large companies aren’t a perfect guide to the health of the national economy. While the country is home to many global brands, the backbone of its industry is the vast number of small- and midsize private businesses known as the Mittelstand.

Those traditionally family-owned private firms haven’t encountered the same challenges as large public companies, Mr. Lawrence said, in part because their management system is less complex and they aren’t subject to the restrictions of the public market.

But this has brought other negative consequences. According to a report from the International Monetary Fund this week, about 60% of corporate assets and profits in Germany are generated by privately-owned firms, contributing to rising wealth inequality in Germany, the strongest in Europe behind the Netherlands and Austria.

“The concentration of privately held and publicly-listed firm ownership in the hands of industrial dynasties and institutional investors is especially prevalent in Germany,” the IMF report said.

40% of Americans say they still struggle to pay bills… This doesn’t look like the best economy ever…


In discussions with 30 Americans unable to pay all of their bills, a clear pattern emerged: Most were able to eke by until they faced an unexpected crisis such as a job loss, car trouble or storm damage.

The extra expense caused them to get behind on their bills, and they never fully rebounded. Economists fear such precarious financial situations put many Americans at risk if there is even a mild setback in the economy, potentially setting up the next recession to be worse than anything in recent history except the Great Recession.

“So many Americans are living paycheck to paycheck,” said Signe-Mary McKernan, vice president of the Center on Labor, Human Services and Population at the Urban Institute. “We are headed toward a political crisis, if not an economic one.”

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Their vulnerability is due to a confluence of factors. First, the average American family has yet to recover fully from the 2008 financial crisis, the Federal Reserve found, leaving half the nation with a diminished cushion to handle surprise expenses — or the next downturn.

The bottom half has less wealth today, after adjusting for inflation, than it did in 1989, according to Fed data through March of this year. While wage growth has accelerated in recent months, especially for the lowest-paid workers, families who have struggled for years have a ways to go to return to solid footing.

Half of U.S. jobs pay less than $18.58 an hour and more than a third pay less than $15, which makes it difficult to save or invest for a better future.

Trump and his team argue that a strong economy is lifting more and more Americans up financially, including blue-collar workers, the formerly incarcerated and minorities. In contrast, Democrats are calling for major expansions of government programs to address inequality. How to help the economically vulnerable is likely to be a key debate in the 2020 race.

“Just because folks on Wall Street think things are fine doesn’t mean most Americans feel like things are fine,” said Ray Boshara, director of the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis. “When every day is a rainy day for millions of families, things are not fine.”

To get by, Americans have borrowed heavily in recent years. Total U.S. household debt is now $13.7 trillion, surpassing the 2008 peak in dollar terms, according to the Federal Reserve Bank of New York. The surge in debt this time around is for cars and college, not mortgages.

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Older and wealthier — and usually white — Americans typically take on debt to buy homes or make investments that are likely to make them richer in the years to come. Most in this category have recovered the wealth they lost in the Great Recession as home prices and stocks have soared.

In contrast, data from the Fed and the credit-score company Equifax show that families of color, Americans born after 1970 and households earning less than $60,000 are the least likely to have recovered the wealth they lost in the crisis. And they tend to carry heavy debt loads, often taking out loans for college, which they cannot get rid of in bankruptcy, or loans to pay bills, which can put them further behind.

The prevailing view among Wall Street investors and Washington policymakers is that there is little to worry about because student loans are backed by the government and delinquency rates for other kinds of debt are fairly low, meaning most people can make their monthly payments.

Credit quality is about as good as I’ve ever seen it,” said Mark Zandi, chief economist at Moody’s Analytics. “There is nothing that suggests inordinate stress on low-income households . . . certainly nothing compared to times past.”


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