Tag Archives: U.S. Economic Growth

Apple Buybacks Pay Most Ever; Walt Disney Earnings Higher Than Expected

Here’s today’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the financial markets:

Main Trading Event Of The Day: U.S. Trade Balance @ 12.30 GMT

WHAT WE’RE WATCHING TODAY

Wealth Gap Slowing U.S. Economic Growth

Economists argue that a rising wealth gap has complicated the U.S. and the widening gap between the wealthiest Americans and everyone else has made the economy more prone to boom-bust cycles while slowing the 5-year-old recovery from the recession. They believe that economic disparities appear to be reaching extremes which need to be watched because they’re damaging to growth. The rising concentration of income among the top 1 percent of earners has contributed to S&P cutting its growth estimates for the economy. In part, because of the disparity, it estimates that the economy will grow at a 2.5 percent annual pace in the next decade, down from a forecast five years ago of a 2.8 percent rate. S&P advises against using the tax code to try to narrow the gap and suggests that greater access to education would help ease wealth disparities. Heavy taxes meant to reduce inequality could remove incentives for people to work and cause businesses to hire fewer employees because of the costs involved. Income disparities can hurt growth since consumers tend to become more dependent on debt to continue spending, thereby worsening the boom-bust cycle or they curb their spending, and growth improves only modestly, as it has during the current recovery.

Gold Rises As Ukraine Tensions Hurt Equities

Gold nudged up slightly today and could benefit from market risk aversion as fears of increasing military action along the Ukraine border put global equities under pressure. Spot gold rose 0.2 percent to $1,289.80 an ounce after closing flat in the previous session. U.S. gold was up about $6 to $1,291.20. Geopolitical tensions in Ukraine and the Middle East have largely been responsible for gold’s 7 percent gain this year. Gold, often seen as alternative investment to riskier assets such as equities, could gain if stocks fall further. Bullion investors continued to keep an eye on economic data, after a Tuesday report showed new orders for U.S. factory goods rose more than expected in June. Recent U.S. data pointing to strengthening economic activity has weighed on gold’s appeal on fears that monetary policy could soon be tightened. The physical markets have failed to provide support to prices recently due to the seasonally quiet summer period.

Apple Buybacks Pay Most Ever; Walt Disney Earnings Higher Than Expected

With Apple’s repurchases staking a claim as the most profitable on record, buybacks remain one of America’s most popular antidotes to bears. The company is up 25 percent since it spent $18 billion on its own shares between January and March and rallied 32 percent after a $16 billion buyback in 2013. Those are the highest four-month returns among the 20 biggest quarterly repurchases by any company since 1998, according to data. Apple’s $18 billion repurchase in the first quarter and the $16 billion it spent between April and June of 2013 are the two biggest buybacks by any company in data compiled by S&P starting in 1998. They came as the stock advanced as much as 77 percent over 15 months after falling to a 16-month low in April 2013. The return followed the weakest period for Apple shares in the last decade. After jumping almost 900 percent from the end of 2005 through September 2012 and becoming the world’s largest company by market value, Apple plunged 44 percent in seven months amid concern about new products and competition.

Meanwhile, Walt Disney, the entertainment conglomerate posted earnings per share of $1.28, excluding items, on $12.47 billion in revenue, compared to an expected EPS of $1.17 on $12.16 billion in sales. Shares edged higher in after-hours trading.

That sums up today’s highlights! We hope you have a profitable day on the markets.

U.S. Growth Evident But Consumers & Businesses Still Penny Pinching

Here’s today’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the financial markets:

Main Trading Event Of The Day: U.S. Existing Home Sales @ 14.00 GMT

WHAT WE’RE WATCHING TODAY

U.S. Growth Evident But Consumers & Businesses Still Penny Pinching

The American job market is on the way up with an increase in hiring and U.S. manufacturers are growing faster. The economy finally seems to have emerged from its winter slow down and is now on an upbeat path….However, Americans are spending less than they used to, a big hindrance for an economy that relies heavily on consumers to generate growth. The slower pace of consumer spending can be traced to a prolonged period during which businesses have invested below their historical norm. Markets will get another look this week at whether the trends in consumer spending and business investment took a turn for the better in May but economists don’t expect a huge improvement. An update on new homes sales is due and the government is likely to report that the economy shrank even more sharply in the first quarter than previously estimated. Although an improving economy is visible, it still has a long way to go before a five-year-old recovery can be considered in good shape. These days, it’s not as easy for prospective buyers get a home loan as financial companies don’t want to make the same mistake they made before the recession by accepting customers who pose any credit risk. The third and final revision to first-quarter gross domestic product probably won’t bring any cheer the markets either as the government is expected to report that U.S. growth contracted by 2% instead of 1% as previously reported which would be the biggest decline since the tail end of the 2007-2009 recession.

The case for faster U.S. growth in the second quarter of 2014 and beyond rests on the hope that businesses and consumers will spend more although so far this year, companies haven’t toed the line. Business investment as measured by a category known as core capital goods fell in April and it’s only rising at a modest 3.5% rate over the past three months. Durable goods orders for May, released on Wednesday, is unlikely to show a marked shift in business investment either. As for consumers, they did more shopping in the early spring and spending is likely to rise in May, but spending is running at just two-thirds the typical rate this far into an economic recovery. Part of what’s holding them back is a paltry increase in wages even though more companies are hiring and job opening are at a post-recession high. After inflation is taken into account, wages are basically flat over the past year. Yet while Fed officials expect unemployment to fall even faster than they predicted just a few months ago, they haven’t changed their growth forecasts for the next two years. As market watchers know, faster U.S. growth depends on willingness to spend and invest…

Oil Gains On Increasing Iraq Violence

West Texas Intermediate rose for the third day and Brent gained as militants in Iraq seized more territory and President Obama warned that the crisis may spill over into other countries. August futures climbed as much as 0.6 percent in New York. A Chinese manufacturing gauge rose to a seven-month high in June, indicating that the economy of the world’s second-biggest oil user is picking up. WTI for August delivery rose by 62 cents to $107.45 a barrel. The July contract expired at $107.26 on June 20. The volume of all futures traded was about 1 percent above the 100-day average. Front-month prices have increased 8.9 percent this year. Brent for August settlement gained as much as 47 cents, or 0.4 percent, to $115.28 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $7.96 to WTI, from $7.98 on June 20.

Apple iWatch Due To Begin Production

Taiwan’s Quanta Computer will start mass production of Apple’s first smartwatch in July, as the company attempts to prove it can still compete against rival Samsung Electronics. The watch will be Apple’s first foray into a niche product category that many remain skeptical about, especially as to whether it can drive profits amid cooling growth in tech gadgets. Apple is expected to ship 50 million units within the first year of the product’s release. Mass production will start in July and the commercial launch will come as early as October. The company is accountable for at least 70 percent of final assembly. LG Display Co is said to be the exclusive supplier of the screen for the gadget’s initial batch of production. The iWatch also contains a sensor that monitors the user’s pulse for which Singapore-based imaging and sensor maker Heptagon is on the supplier list for the feature.

That sums up today’s highlights! Keep checking in for all the latest news on the day’s trading events via Facebook, Twitter, Google+ & LinkedIn. We hope you have a profitable day on the markets.

Will The Bank Of England Inflation Report Move Sterling?

Here’s today’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the financial markets:

Main Trading Event Of The Day: U.K. BOE Inflation Report @ 09.30 & U.S. PPI @ 12.30 GMT

WHAT WE’RE WATCHING TODAY

Will The Bank Of England Inflation Report Move Sterling?

The GBP has had a favourable performance over the past year, but with the Bank of England’s inflation report due today, this could be set to change. Investors will be listening to BoE Governor Mark Carney closely for any indications of an interest rate hike this year against a backdrop of a strengthening British economy. Traders will be focusing on the British pound as the Bank of England’s Quarterly Inflation Report is one of the most important event risks this week. The big question is whether the economic landscape has changed enough for the central bank to take a more active approach to monetary policy.

After years of sluggish growth following the 2008 financial crisis, the U.K. economy has finally landed on its feet and is set to clock up a healthy 3 percent growth rate this year. However, house prices remain a concern, with a 10 percent surge over the past year raising fears of a bubble. As the economy recovers, many industry watchers have speculated that the central bank could raise interest rates from all-time lows of 0.5 percent in a bid to offset inflation. Retail sales growth also remains weak while consumer price growth slowed to 1.6 percent in March from 1.7 percent in February, dampening rate hike expectations.

Nevertheless, analysts remained convinced that the BoE inflation report could give the pound a boost and that it is due a little bounce having lost some ground recently. Major policy changes are not expected to come out of the BoE’s inflation report, with Carney likely to retain an optimistic outlook on the U.K. recovery while acknowledging spare capacity in the economy.

U.S. Retail Sales Slow, But Economic Growth On Track to Accelerate

U.S. retail sales slowed down in April after strong gains in the previous two months but the news appears to have done little to change views that the economy was poised for faster growth this quarter. Retail sales edged up 0.1 percent last month, held back by declines in some sectors including furniture and electronics, possibly due to consumers being more cautious in their spending habits as they await confirmation that the economy is, in fact, poised to accelerate. Retail sales, which account for a third of consumer spending, rose 1.5 percent in March, the biggest gain in four years. That followed a healthy increase in February, reflecting the release of pent-up demand after the severe winter. Economists, who had forecast sales advancing 0.4 percent last month, said a late Easter could have caused difficulties smoothing the data for seasonal fluctuations, causing the sharp swing from March to April. Prices for U.S. Treasury debt rose on the data, while the dollar gained against a basket of currencies. U.S. stocks rose marginally, with the Dow Jones industrial average and Standard & Poor’s 500 index both inching to record levels. Data such as employment as well as manufacturing and services industries surveys have suggested the economy regained strength early in the second quarter.

U.S. Inflation Data Awaited As Dollar Bulls Await Increase In Consumer Prices

Dollar bulls are expecting U.S. data this week will show consumer prices picked up last month, bringing inflation closer to the Federal Reserve’s 2 percent threshold it has set for considering a rate hike. The U.S. dollar index recovered from a 20-month low of 78.906 set last Thursday after European Central Bank head Mario Draghi warned that the euro’s strength was a serious concern and that the ECB was comfortable with taking more action to support economic growth and raise inflation at its June meeting. The strength of this week’s scheduled U.S. data releases which include the closely-watched April consumer price index (CPI) on Thursday and the bearing it has on Fed rate expectations will decide whether the dollar continues its turnaround. Consensus forecasts show April’s core CPI up 1.7 percent from a year earlier, unchanged from the prior month’s reading. Sentiment regarding whether the dollar will extend gains or weakens appears to be evenly split between dollar bulls and bears. Dollar bears maintain inflation remains low and highlight the Fed’s preferred gauge of inflation - the price index for personal consumption expenditures - which has run below 2 percent for 23 consecutive months. Fed Chair Janet Yellen warned last week about the risks posed to the recovery from the U.S. housing market slowdown, suggesting that the Fed may be in no hurry to raise rates.

That sums up today’s highlights! Keep posted with all the latest news and analyst updates via our Facebook, Twitter, Google+ and LinkedIn pages.

We hope you have a profitable day on the markets!