One Percent Move Report for April 12, 2024 April 12, 2024
Introduction:
(Morgan Stanley)
What Happened in the Markets?
• The S&P 500 Index fell 1.5% Friday to end the day at 5,123.41, having gained 7.4% thus far in 2024.
• Zero of the 11 S&P 500 sectors were higher on the day, as Utilities (-0.7%) and Consumer Staples (-0.9%) were the strongest-performing S&P 500 sectors, while Information Technology (-1.6%) and Materials (-1.8%) underperformed.
• By the 4:00 p.m. equity market close, the US 10-year Treasury yield decreased 7bp to 4.52%; WTI crude oil prices increased 0.6% to $85.52 per barrel; and gold decreased 1.2% to $2,344.14 per ounce.
Why Did This Move Happen?
• All S&P 500 sectors moved lower today as geopolitical concerns and the start of first quarter earnings season triggered a risk-off trade. Equity volatility picked up, with the VIX jumping to 18.0 its highest level in 2024.
• After Bloomberg reported that Israel is preparing for a potential direct attack this weekend, oil prices increased. Rising commodity prices may push inflation higher, particularly after this week’s hot CPI report already dashed hopes of a Fed rate in June. Import prices also rose more-than-expected, at 0.4% month-over-month.
President Biden Moves to Triple Tariff Rates on Chinese Steel and Aluminum by Joey Garrison
April 17, 2024
Introduction:
(USA Today) WASHINGTON ― President Joe Biden wants to triple the rates of tariffs on steel and aluminum from China amid pressure from labor unions concerned about the survival of the U.S. steel industry because of Chinese competition.
Biden, during an address Wednesday to the United Steelworkers union in Pittsburgh, will call on his United States Trade Representative, Katherine Tai, to consider tripling the existing 7.5% average tariff rate on Chinese steel and aluminum under Section 301 of the Trade Expansion Act, according to the White House.
With the move, Biden is borrowing from the trade playbook of former President Donald Trump, the Republican presumptive nominee, who routinely raised tariffs on Chinese goods during his four years in office.
Lael Brainard, the White House director of the National Economic Council, said China − which produces more than half the world's steel − is making more steel than the world can absorb, "flooding global markets at artificially low prices" and "undercutting American steel that is clean."
Production of Chinese steel isn’t subject to the same level of environmental regulation as the U.S. requires domestically.
The S&P 500 Index fell 1.2% Monday (April 15, 2024) to end the day at 5,061.82, having gained 6.1% thus far in 2024.
Zero of the 11 S&P 500 sectors were higher on the day, as Health Care (-0.2%) and Consumer Staples (-0.5%) were the strongest-performing S&P 500 sectors, while Real Estate (-1.8%) and Information Technology (-2.0%) underperformed.
By the 4:00 p.m. equity market close, the US 10-year Treasury yield increased 9bp to 4.61%; WTI crude oil was flat at $85.62 per barrel; and gold increased 1.7% to $2,385.14 per ounce.
Why Did This Move Happen?
The S&P 500 ended 1.2% lower, while the VIX (Market Volatility Index) closed at a 2024 high of 19.22. Sharply higher Treasury yields, geopolitical concerns, and the ramp-up of 1Q2024 earnings season collectively weighed on US equities.
US retail sales for March came in well above expectations, growing 0.7% month-over-month versus consensus estimates for 0.4% growth. The data suggested that consumer health remains intact and provides further evidence for a potential “no landing” scenario, but it also points to the growing probability of a higher-for-longer interest-rate environment
caltrek wrote: ↑Sat May 28, 2022 4:51 pmTech Layoffs Exceed 15,000 in Brutal May
by Natasha Mascarenhas and Amanda Silberling
May 27, 2022
The article goes on to discuss the job situation at the Brazilian based Vtex, PayPal (based in San Jose, California), Getir (Turkey), Gorillas (based in Berlin, Germany), Latch (New York), Snap (based in Santa Monica, California), Klarna (Sweden), Bolt (San Francsico, California), and Instacart (headquartered in San Francisco, California).
Grocery delivery app Getir prepares to exit UK market
Friday 19 April 2024 16:26, UK
Getir, the grocery delivery app once valued at nearly $12bn (£9.7bn), is close to pulling the plug on its operations in Britain in a move that would spark concerns for well over 1,000 jobs.
Sky News has learnt that Getir is preparing to announce next week that it is withdrawing from the three remaining European markets in which it operates: the UK, Germany and the Netherlands.
In total, thousands of jobs will be put at risk, including approximately 1,500 in the UK, according to people close to the situation.
The process through which Getir, which has a multimillion-pound commercial partnership with the Premier League's Tottenham Hotspur, plans to exit the UK was unclear on Friday.
Insiders said, that it could involve a sale of its assets or an insolvency procedure although they added that no decisions had been taken.
New US Home Sales Jump to Highest Level Since September
Source: Bloomberg
Sales of new homes in the US bounced back in March in a broad advance as prospective buyers toughed out high mortgage rates. New single-family home sales increased 8.8% to a 693,000 annual pace last month, the fastest since September, government data showed Tuesday. Economists surveyed by Bloomberg gave a median estimate of 668,000.
The figures indicate that sales have somewhat stabilized in recent months, though the data are volatile. Underlying demand remains strong, but buyers are still constrained by high mortgage rates and prices, which are limiting the extent to which the housing market can gain momentum.
Inflation has proved stubborn in recent months, calling into question not only when the Federal Reserve will cut interest rates in 2024, but if it will at all. Mortgage rates above 7% continue to plague existing-home sales, which are “stuck,” National Association of Realtors Chief Economist Lawrence Yun said last week.
While the resale market is struggling with a lack of inventory, builders are stepping in to fill the void. The supply of new homes for purchase rose to 477,000 in the month, the highest since 2008.
• The S&P 500 rose 1.2% Tuesday to end the day at 5,070.55, having gained 6.3% thus far in 2024.
• Ten of the 11 S&P 500 sectors were higher on the day, as Communication Services (+1.9%) and Information Technology (+1.7%) were the strongest-performing S&P 500 sectors, while Consumer Staples (+0.2%) and Materials (-0.8%) underperformed.
• By the 4:00 p.m. equity market close, the US 10-year Treasury yield decreased 1bp to 4.60%; WTI crude oil increased to $83.32 per barrel; and gold decreased -0.2% to $2,322.44 per ounce.
Why Did This Move Happen?
• The S&P 500 Index rose on Tuesday in a continuation of Monday’s rebound, which had snapped a six-day losing streak. Megacap Tech lead the broad-based rally on optimism that quarterly earnings results will support the bullish market narrative around AI amid elevated valuations.
• The VIX Index, often referred to as the market’s “fear gauge,” retreated to below 16 on Tuesday, after briefly spiking above 20 last Friday. Last week, markets were unnerved by hawkish Fed commentary and mounting geopolitical risks. This week, with Fed officials in their public blackout period, and the probability of further escalation in the Middle East apparently diminished for the moment, investors shifted to focusing squarely on corporate earnings.
US applications for jobless claims fall to lowest level in 9 weeks
Source: ABC News/AP
April 25, 2024, 8:41 AM
Fewer Americans applied for unemployment benefits last week as the labor market continues to hold up despite higher interest rates imposed by the Federal Reserve in its bid to curb inflation.
The Labor Department reported Thursday that unemployment claims for the week ending April 20 fell by 5,000 to 207,000 from 212,000 the previous week. That's the fewest since mid-February.
The four-week average of claims, which smooths out some of the weekly up-and-downs, ticked down by 1,250 to 213,250.
Weekly unemployment claims are considered a proxy for the number of U.S. layoffs in a given week and a sign of where the job market is headed. They have remained at historically low levels since the pandemic purge of millions of jobs in the spring of 2020.
U.S. economy grew at 1.6 percent annual rate in first quarter 2024, a sharp slowdown
Source: Washington Post
By Abha Bhattarai
Updated April 25, 2024 at 8:34 a.m. EDT Published April 25, 2024 at 6:00 a.m. EDT
U.S. economic growth slowed in the first three months of the year, with gross domestic product growing at an annualized rate of 1.6 percent, as consumers began gradually pulling back.
GDP was down sharply from the 3.4 percent annual rate in the last quarter of 2023, according to data released this morning by the Bureau of Economic Analysis.
Gross domestic product, the sum of all of the goods and services produced in the country, is the broadest measure of the economy.
"Growth is slowing, but clearly the economy is still on a solid path," said Ben Ayers, senior economist at Nationwide, which recently scrapped its recession forecast for the year. "We've had very strong job growth that's fueling higher incomes, giving people the money to go out and spend. But that's also kept inflation high, so honestly a little bit of cooling is good news."
Key Fed inflation measure rose 2.8% in March from a year ago, more than expected
Source: CNBC
Published Fri, Apr 26 2024 8:31 AM EDT Updated 12 Min Ago
Inflation showed little signs of letting up in March, with a key barometer the Federal Reserve watches closely showing that price pressures remain elevated.
The personal consumption expenditures price index excluding food and energy increased 2.8% from a year ago in March, the same as in February, the Commerce Department reported Friday. That was above the 2.7% estimate from the Dow Jones consensus.
Including food and energy, the all-items PCE price gauge increased 2.7%, compared to the 2.6% estimate. On a monthly basis, both measures increased 0.3%, as expected and equaling the increase from February.
Markets showed little reaction to the data, with Wall Street poised to open higher. Treasury yields fell, with the benchmark 10-year note at 4.67%, down about 0.4 percentage point on the session. Futures traders grew slightly more optimistic about two potential rate cuts this year, raising the probability to 44%, according to the CME Group’s FedWatch gauge.
US job openings fall to 8.5 million in March, the lowest level in more than 3 years
WASHINGTON (AP) — U.S. jobs openings slid in March to the lowest level in more than three years, but stayed at historically high levels in a sign that the job market remains resilient in the face of higher interest rates. ... The Labor Department reported Wednesday that employers posted 8.5 million vacancies in March, down from 8.8 million in February and the fewest since February 2021.
The number of Americans quitting their jobs fell to the lowest level since January 2021 — a sign of diminishing confidence in their ability to find something better. But layoffs fell.
Monthly job openings are down sharply from a peak of 12.2 million in March 2022 but remain at a high level. Before 2021, they'd never exceeded 8 million — a threshold they have now reached for 37 straight months.
The high level of job openings reflects a surprisingly strong U.S. labor market. When the Federal Reserve began raising interest rates in March 2022 to combat a resurgence in inflation, the higher borrowing costs were expected to tip the economy into recession and push up unemployment.
U.S. job growth totaled 175,000 in April, much less than expected, while unemployment rose to 3.9%
Source: CNBC
Published Fri, May 3 2024 8:30 AM EDT Updated 5 Min Ago
The U.S. economy added fewer jobs than expected in April while the unemployment rate rose, reversing a trend of robust job growth that had kept the Federal Reserve cautious as it looks for signals on when it can start cutting interest rates.
Nonfarm payrolls increased by 175,000 on the month, below the 240,000 estimate from the Dow Jones consensus. The unemployment rate ticked higher to 3.9% against expectations it would hold steady at 3.8%.
Average hourly earnings rose 0.2% from the previous month and 3.9% from a year ago, both below consensus estimates and an encouraging sign for inflation.
The jobless rate tied for the highest level since January 2022. A more encompassing rate that includes discouraged workers and those holding part-time jobs for economic reasons also edged up, to 7.4%, its highest level since November 2021. The labor force participation rate, or those actively looking for work, was unchanged at 62.7%.
• The S&P 500 increased 1.3% Friday to end the day at 5,127.79, having gained 7.5% thus far in 2024.
• Ten of the 11 S&P 500 sectors were higher on the day, as Information Technology (+3.0%) and Communication Services (+1.0%) were the strongest-performing S&P 500 sectors, while Health Care (+0.2%) and Energy (0.0%) underperformed.
• By the 4:00 p.m. equity market close, the US 10-year Treasury yield decreased 8bp to 4.50%; WTI crude oil decreased to $78.13 per barrel; and gold decreased -0.1% to $2,302.54 per ounce.
Why Did This Move Happen?
• The S&P 500 rose on Friday as a softer jobs report eased fears that the economy may be overheating. In a “bad-news-is-good-news” dynamic, both stocks and bonds rallied, as investors boosted their expectations for Fed policy easing.
Inflation Cooled in April as Price Gains Slowed by Courtenay Brown
May 15, 2024
Introduction:
(Axios) The Consumer Price Index (CPI) rose 0.3% in April and the core measure that strips out food and energy increased by the same amount, the Labor Department said on Wednesday.
Why it matters: Inflation slowed for the first time this year, helping ease concerns that progress on moderating consumer prices had stalled out.
• The report on Wednesday showed the overall consumer price index increased 3.4% over the last 12 months, compared to 3.5% in March.
• Meanwhile, the core measure rose 3.6% in the year through April, versus the 3.8% the prior month.
Zoom in: The slight cooldown in price increases come after a stretch of data showing inflation had stopped slowing after big declines last year.
High Rates May Not be Bringing Down Inflation as Much as the Fed Thinks by Neil Irwin
May 21, 2024
Introduction:
(Axios) "If a tree falls in the forest and no one is around to hear it, does it make a sound?" is an old philosophical thought experiment. There is a monetary policy equivalent right now: If high interest rates don't visibly slow the economy, are they doing anything to bring inflation down?
Why it matters: It's unclear how much the Fed's high interest rate policy is exerting downward pressure on economic activity, raising profound questions about the central bank's power to guide the economy and manage inflation.
• No recession has occurred, contrary to forecasts when the Fed raised interest rates by more than 5 percentage points in 2022 and 2023. The unemployment rate has remained below 4% for 27 straight months.
• GDP growth has been above its long-term trend over the last year, and even interest-sensitive residential investment has been positive in the last three quarters.
"Inflation" Doesn't Mean What It Used to Mean by Felix Salmon
May 26, 2024
Introduction:
(Axios) The meaning of the word "inflation" has changed. It used to mean rising prices; now it means high prices.
Why it matters: Pedants, economists, and style-guide editors might not like it, but if you want to understand what people mean when they complain about inflation, you need to understand how the vernacular has evolved over the past couple of years.
The big picture: Inflation, at least as officially measured by the Bureau of Labor Statistics, has come down sharply from its peak of 9% in mid-2022. It now stands at 3.4%, broadly in line with where it was for the quarter-century between 1983 and 2008.
The other side: The headline measure of inflation is based on something pretty arbitrary — where prices were exactly one year ago.
• The more salient timeframe, especially in an election year, might be what has happened to prices since the pandemic, or since Joe Biden took office.
caltrek’s comment: I think it should be kept in mind that the chances that Trump would do something effective about the structural causes of “high prices” are about the same as an ice cube in a fiery hell not melting down.
Of course, this is assuming Trump’s policies do not result in a deep depression. That would be one way of dealing with “high prices.”
