Home » Posts tagged 'Wall Street Journal' (Page 4)

Tag Archives: Wall Street Journal

Rivers in the Carolinas are still rising and North Carolina Gov. Roy Cooper has warned that it still isn’t safe for displaced residents to return to their property. But that hasn’t stopped Moody’s from releasing the first estimate of the economic damage wrought by Hurricane Florence.

According to the Wall Street Journal, the ratings agency’s estimates put the total economic toll at somewhere between $38 billion and $50 billion – more than double an initial estimate of between $8 billion and $20 billion from Goldman Sachs and S&P.And nearly ten times CoreLogic’s initial estimate of between $3 billion and $5 billion.

If damages reach the upper end of that range, it would leave Florence in seventh place among the biggest storms, just after 1992’s Hurricane Andrew, according to Moody’s estimates.

Notably, the expected toll is lower than each of last year’s three major hurricanes:

Based on Moody’s estimates, last year’s three hurricanes each caused more damage than Florence: Harvey’s tally reached $133.5 billion; Maria’s $120 billion; and Irma’s $84.2 billion.

Still, the storm has continued to wreak havoc in the region as the death toll has risen to 41. Rivers in the Carolinas have continued to rise, and rescues are still being carried out by first responders. Meanwhile, water levels for the Cape Fear River are expected to peak on Saturday:

Florence, which made landfall Sept. 14 and has claimed 41 lives in the Carolinas and Virginia, is continuing to wreak havoc. Rivers in the Carolinas are continuing to rise, and more than 600 roads were still closed Friday in North Carolina. North Carolina Gov. Roy Cooper warned it still isn’t safe for many people to return home including the 3,700 who remain in shelters.

…click on the above link to read the rest of the article…

China May Skip Trade Talks, Cripple US Supply Chains After New Trump Tariffs

September 16, 2018

China May Skip Trade Talks, Cripple US Supply Chains After New Trump Tariffs

When discussing yesterday’s WSJ report that the Trump admin may slap the new, $200BN round of tariffs on Chinese imports as soon as tomorrow, we said that such an escalation would likely derail talks with top Chinese officials, currently scheduled in Washington for Sept. 27 and Sept. 28. Now, in a follow up report, the WSJ has confirmed that in light of the Trump’s imminent announcement, China is considering declining Trump’s offer of trade talks later this month as Trump’s “pressure tactics” aren’t “sitting well” with Beijing, which has repeatedly said it wouldn’t negotiate under threat.

“There is a lot of uncertainty right now,” one of the officials said. “If more tariffs come out, the Chinese side could very well choose not to go.” That said, a final decision has not yet been made on the trips and will depend on what Trump does in the coming days.

Underscoring China’s growing anger toward Trump’s negotiating tactics, Yang Weimin, a former senior economic adviser to President Xi Jinping, said on Sunday that “China never said it doesn’t want to negotiate with the U.S.,” “But the U.S. side has to show sincerity” toward resolving the trade dispute. Added a current senior official who advises the leadership on foreign-policy matters: “China is not going to negotiate with a gun pointed to its head.”

While China’s lack of desire to negotiate would hardly come as a surprise – after all there will be little to discuss if Trump does pull the trigger on even more tariffs – what may come as a shock to US businesses is how China plans to retaliate to the $200BN in new tariffs. Yesterday, we noted that Beijing could prompt respond “qualitatively” by selectively targeting US companies which have a major presence in China, such as US auto makers or Apple.

…click on the above link to read the rest of the article…

Trump To Announce $200 Billion In New China Tariffs As Soon As Monday

September 16, 2018

Trump To Announce $200 Billion In New China Tariffs As Soon As Monday

In the latest installment of the story that just won’t go away, the WSJ reported on Saturday that – as Bloomberg reported first yesterday – the Trump administration plans to announce new tariffs on up to $200 billion in Chinese goods as soon as Monday and otherwise “within days”, in a move that will likely render moot the high-level, U.S.-China talks set for later this month, will prompt an immediate retaliation from China, and may lead to a sharply lower futures open on Sunday night.

The silver lining in the imminent announcement is that while previously Trump had said he would proceed with a 25% tariff level, the WSJ reports that the US will start with tariffs of “around 10%.” The level was lowered “following extensive public hearings and the submission of written comments where importers and others complained of the possible impact of the duties” as well as to try to reduce the bite on American consumers ahead of the year-end holiday shopping season, these people said.

But the people familiar said that the tariff level could be raised back to 25% if Mr. Trump concludes that Beijing doesn’t soon show signs that it is acceding to U.S. demands to change its economic policies.

Furthermore, WSJ sources said that while details were still being completed over the weekend, the tariff level could change, or that Trump could change his mind entirely. As of Saturday, an announcement was planned for Monday or Tuesday.

Recall last week Deutsche Bank calculated that so far the US had carefully avoided consumer and China dependent products, and as a result, the trade war so far has had little impact on US economy and consumers. But this would become harder as the tariff list expands to the next 200 billion, which contains about 78 billion in consumer products (chart below, left).

…click on the above link to read the rest of the article…

US, France, and UK In Direct Talks Over Possible Syria Strikes

September 11, 2018

US, France, and UK In Direct Talks Over Possible Syria Strikes

“That has to be, in the history of propaganda in the 20th and 21st centuries, one of the most outrageous claims that I can think of,” John Bolton stated in response to Moscow’s charge that anti-Assad insurgents in Idlib are preparing a chemical false flag in order to hasten a US attack on Damascus, according to a new Wall Street Journal report.

“Along with the United States and France, we have been clear that we will respond swiftly and appropriately if the Assad regime repeats its appalling use of chemical weapons,” he vowed, echoing statements the national security advisor began making weeks ago during a trip to Jerusalem.

The WSJ has revealed the White House is now in direct talks with the U.K. and France over plans for a possible third round of coordinated strikes on Syriashould the Syrian Army use chemical weapons during its Idlib assault.

After a speech in Washington on Monday, Bolton told reporters, “We’ve been in consultation with the British and the French, who joined us in the second strike, and they also agree that another use of chemical weapons will result in a much stronger response.”

The news comes a day after Bolton indicated during a speech that the US and its allies Syria would respond with much “stronger” and harsher action against Damascus.

Also, early this week there were reports that Germany is mulling over whether to agree to a request by the United States that it join any potential strikes on Syria, though such a move is expected to be too politically divisive for Germany to agree.

…click on the above link to read the rest of the article…

Weekly Commentary: Instability

August 19, 2018

Weekly Commentary: Instability

With the Turkish lira down another 6.6% in Monday trading, global “Risk Off” market Instability was turning acute. The U.S. dollar index jumped to an almost 14-month high Monday, as the Turkish lira, Argentine peso, Indian rupee and others traded to record lows versus the greenback. The South African rand “flash crashed” 10%, before recovering to a 2.3% decline. Brazil’s sovereign CDS jumped 14 bps Monday to a six-week high 252. Italian 10-year yields jumped 11 bps to 3.10%, near the high going back to June 2014, as the euro declined to one-year lows.

The Turkish lira surged 8.4% Tuesday, jumped another 6.8% Wednesday and then gained an additional 1.9% Thursday. Wild Instability then saw the Turkish lira drop 3.1% during Friday’s session, ending the week up 6.9%. Qatar’s $15 billion pledge, along with central bank measures, supported the tenuous lira recovery.

August 17 – Wall Street Journal (Lingling Wei and Bob Davis): “Chinese and U.S. negotiators are mapping out talks to try to end their trade impasse ahead of planned meetings between President Trump and Chinese leader Xi Jinping at multilateral summits in November, said officials in both nations. The planning represents an effort on both sides to keep a spiraling trade dispute-which already has involved billions of dollars in tariffs and comes with the threat of hundreds of billions more-from torpedoing the U.S.-China relationship and shaking global markets. Scheduled midlevel talks in Washington next week, which both sides announced on Thursday, will pave the way for November. A nine-member delegation from Beijing, led by Vice Commerce Minister Wang Shouwen, will meet with U.S. officials led by the Treasury undersecretary, David Malpass, on Aug. 22-23. The negotiations are aimed at finding a way for both sides to address the trade disputes, the officials said, and could lead to more rounds of talks.”

…click on the above link to read the rest of the article…

Fate Of Key Gas Pipeline In The Balance As Putin, Merkel Begin Meeting

August 18, 2018

Fate Of Key Gas Pipeline In The Balance As Putin, Merkel Begin Meeting

“Russian influence will flow through that pipeline right into Europe, and that is what we are going to prevent,” an unnamed U.S. official told the Wall Street Journal just as Russian President Vladimir Putin and Chancellor Angela Merkel meet outside of Berlin on Saturday centered on the two countries moving forward with the controversial Russian-German Nord Stream 2 gas pipeline, but also involving issues from the Iran nuclear deal to ending the war in Syria.

Intense pressure from Washington is overshadowing the project, construction of which is already in advanced stages, as the WSJ citescurrent and former US officials who say sanctions are under discussion and could be mobilized in a mere matter of weeks.

These potential sanctions, ostensibly being discussed in response to US intelligence claims of Russian interference in the 2016 election,could target companies and financial firms involved in the massive pipeline’s construction.

This comes after comments from President Trump at the opening of a NATO summit in July made things uncomfortable for his German counterpart when he said that Germany is so dependent on Russia for energy that it’s essentially being “held captive” by Vladimir Putin and his government.

“Germany is captive of Russia because it is getting so much of its energy from Russia. They pay billions of dollars to Russia and we have to defend them against Russia,” Trump told NATO chief Jens Stoltenberg at a televised opening breakfast.

The pipeline has been opposed by multiple US administrations, who have long accuse the Kremlin of seeking to accrue political leverage over Europe given the latter’s already high dependence on Russian natural gas. The pipeline has been a frequent talking point and target of attacks by Trump, who has threatened to escalate the trade war against Germany going back months if it supported the construction of the pipeline.

…click on the above link to read the rest of the article…

Another Way Of Looking At The Pension Crisis, As “A Stealth Mortgage on Your House”

August 7, 2018

Another Way Of Looking At The Pension Crisis, As “A Stealth Mortgage on Your House”

Money manager Rob Arnott and finance professor Lisa Meulbroek have run the numbers on underfunded pension plans and come up with an interesting – and highly concerning – new angle: That they impose a “stealth mortgage” on homeowners. Here’s how the Wall Street Journal reported it today:

The Stealth Pension Mortgage on Your House

Most cities, counties and states have committed taxpayers to significant future unfunded spending. This mostly takes the form of pension and postretirement health-care obligations for public employees, a burden that averages $75,000 per household but exceeds $100,000 per household in some states. Many states protect public pensions in their constitutions, meaning they cannot be renegotiated. Future pension obligations simply must be paid, either through higher taxes or cuts to public services.

Is there a way out for taxpayers in states that are deep in the red? Milton Friedman famously observed that the only thing more mobile than the wealthy is their capital. Some residents may hope that they can avoid the pension crash by decamping to a more fiscally sound state.

But this escape may be illusory. State taxes are collected on four economic activities: consumption (sales tax), labor and investment (income tax) and real-estate ownership (property tax). The affluent can escape sales and income taxes by moving to a new state—but real estate stays behind. Property values must ultimately support the obligations that politicians have promised, even if those obligations aren’t properly funded, because real estate is the only source of state and local revenue that can’t pick up and move elsewhere. Whether or not unfunded obligations are paid with property taxes, it’s the property that backs the obligations in the end.

…click on the above link to read the rest of the article…

Facebook Asking Major US Banks To Share User Data

August 6, 2018

Facebook Asking Major US Banks To Share User Data

Facebook has asked several large US banks to share detailed financial information about their customers, including checking account balances and card transactions, as part of a new push to offer new services to its users, according to the Wall Street Journal.

Facebook increasingly wants to be a platform where people buy and sell goods and services, besides connecting with friends. The company over the past year asked JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and U.S. Bancorp to discuss potential offerings it could host for bank customers on Facebook Messenger, said people familiar with the matter. –WSJ

Facebook’s new feature would show people their checking account balances, as well as offer fraud alerts, according to the WSJ‘s sources, while the banks are apparently waffling over data privacy concerns.

The negotiations come as the social media giant has fallen under several investigations over data harvesting, including its ties to political analytics firm Cambridge Analytica, which was able to gain access to the data of as many as 87 million Facebook users without their consent.

One large bank withdrew from talks due to privacy concerns, according to the Journal, however Facebook swears that they’re simply trying to enhance the user experience and won’t use any banking data for ad-targeting.

Facebook has told banks that the additional customer information could be used to offer services that might entice users to spend more time on Messenger, a person familiar with the discussions said. The company is trying to deepen user engagement: Investors shaved more than $120 billion from its market value in one day last month after it said its growth is starting to slow.

Facebook said it wouldn’t use the bank data for ad-targeting purposes or share it with third parties. –WSJ

…click on the above link to read the rest of the article…

Five Trillion Dollars! Doomed US Pensions’ Shortfall Now The Size Of Japan’s Economy

August 1, 2018

Five Trillion Dollars! Doomed US Pensions’ Shortfall Now The Size Of Japan’s Economy

Scores of public pensions across the United States are so massively underfunded that the shortfall is roughly equal to Japan’s GDP – the world’s third-largest economy, according to Moody’s Investors Service.

State and local pension plans in the U.S. now have less than three- quarters of the money they need to meet their promised payouts, their lowest level since at least 2001, according to Public Plans Database figures weighted by plan size. In dollar terms the hole for state and local pensions is now $5 trillion, according to Moody’s Investors Service. –WSJ

If governments don’t increase taxes, convince pensioners to take less than they were promised or divert funds from elsewhere, an increasing number of funds face insolvency, reports the Wall Street Journal.

In Kentucky, for example, a major pension for state employees had around 16% of what it needs to fulfill its obligations based on 2017 fiscal year figures, according to the Public Plans database which tracks state and local pension funds. A Chicago municipal employee fund had less than 30% of what it needed during the same fiscal year, while New Jersey’s state pension is so underfunded it faces insolvency in 12 years according to a Pew Charitable Trusts Study.

For an example of what happens when a pension hits a brick wall, look no further than Central Falls, Rhode Island – a city of 19,359 which was forced to cut monthly checks to retired police and firefighters by as much as 55% as the entire town tried to stave off bankruptcy. Alas, the town still filed in 2011 – and while its financial situation has improved, retired city employees aren’t getting their full pensions back.

…click on the above link to read the rest of the article…

Harvard Professors Expose ‘The Real Problem With Stock Buybacks’

July 8, 2018

Harvard Professors Expose ‘The Real Problem With Stock Buybacks’

Many critics say buybacks crimp investment. But the real problem is that – unlike dividends – buybacks can be used to systematically transfer wealth from shareholders to executives..

There is a problem with share buybacks – but it isn’t the one many critics and legislators are obsessed with.

Some critics claim that repurchases starve firms of capital they could invest for the long term, harming workers to enrich shareholders. Democratic Sens. Chuck Schumer of New York and Tammy Baldwin of Wisconsin agree and have introduced legislation to “rein in” corporate stock buybacks. The bill would give the Securities and Exchange Commission authority to reject buybacks that, in its judgment, hurt workers. It also would require boards to “certify” that a repurchase is in the “best long-term financial interest of the company.” Sen. Baldwin has introduced another bill, co-sponsored by Sen. Elizabeth Warren (D., Mass.), that goes even further: It bans all open-market repurchases.

This criticism of buybacks is flawed; there is simply no evidence that the overall volume of dividends and repurchases is excessive. The real problem with buybacks is that they tend to enrich executives at the expense of shareholders. Fortunately, there is a simple remedy.

Flawed argument

Buyback critics say S&P 500 firms don’t have enough investment capital because dividends and repurchases routinely exceed 90% of their net income. Between 2007 and 2016, for example, these companies distributed $7 trillion to shareholders, mostly via repurchases. That was 96% of total net income. But our research shows that public firms recover from shareholders – directly or indirectly – about 80% of the capital distributed via repurchases. Shareholders return this capital by buying newly issued shares, mostly from employees paid with stock, but also directly from firms. Taking into account all types of equity issuances, net shareholder payouts in S&P 500 firms during the decade 2007-2016 were only about $3.7 trillion, or 50% of total net income.

…click on the above link to read the rest of the article…

China’s Surveillance State Is Using RFID Chips To Track Cars’ Movements

June 14, 2018

China’s Surveillance State Is Using RFID Chips To Track Cars’ Movements

China, the world’s most populous country, continues to devise new methods of keeping tabs on its 1.4 billion citizens. And after the Wall Street Journal reported earlier this week about a powerful new spy camera devised by a team of researchers at Duke University who had, incidentally, received funding from the US government, America’s business newspaper of record is back Wednesday with another stunning report, this time about how China is establishing a new system to track cars using electronic tags. Indeed, WSJ describes the plan to “improve public security”, which will also purportedly help ease extreme congestion in the largest Chinese cities.

The plan, which is set to be rolled out by July 1, will rely on chips that can be identified thanks to their unique radio frequency signature. Compliance will be voluntary at first, but it will become mandatory for all new vehicles by Jan. 2019.

Of course, the plan will dramatically expand China’s ability to track its citizens’ every move – something that’s becoming increasingly important as Chinese authorities seek to implement their “social credit score.”

China’s surveillance network already includes powerful cameras that can detect an individual’s facial features from 100 yards away, according to WSJ. Meanwhile, the program will have a serious impact on China’s automotive industry, which is feeding the world’s biggest market, with nearly 30 million vehicles expected to be sold this year.

“It’s all happening in the backdrop of this pretty authoritarian government,” said Ben Green, a fellow at Harvard University’s Berkman Klein Center for Internet and Society who is researching use of data and technology by city governments. “It’s really hard to imagine that the primary use case is not law enforcement surveillance and other forms of social control.”

…click on the above link to read the rest of the article…

City Officials Struggle To Fend Off “Unstoppable Juggernaut” Of Chinese Homebuyers

June 9, 2018

City Officials Struggle To Fend Off “Unstoppable Juggernaut” Of Chinese Homebuyers

As we’ve pointed out time and time again, foreign – mainly Chinese – buyers seeking to park their ill-gotten gains beyond the reach of the Communist Party have – in addition to global capitals like New York City and London – favored a handful of cities in the Pacific Northwest, as well as Australia and New Zealand. Many of these cities – for example, Vancouver – have seen property values rise to levels that are unaffordable for local buyers.

While the influx of capital helped fuel an economic recovery in the aftermath of the crisis, home values soon reached crisis levels that demanded action by local officials. Some places have tried to use taxes to deter foreign buyers. In some instances, the taxes worked – at least temporarily.

But with the flow of buyers refusing to slow despite efforts by the Chinese government to stop money moving offshore, many of these cities are getting desperate. And after years of occasional headlines, it appears the crisis has finally become dire enough for the mainstream press to start paying attention.

To wit, government officials in Canada and Australia who spoke with the Wall Street Journal for a story about how Chinese homebuyers expressed concern that widespread foreign ownership has created bubbles in local real-estate markets. Even as Australia and New Zealand and some Canadian cities have raised taxes on foreign buyers, many are worried that home values will continue to climb, foiling policy makers best efforts to control them. Since it passed an 8% foreign buyers tax last summer, Sydney says foreign buying hasn’t let up.

Jon Ellis, chief executive of Investorist, an online portal for cross-border property transactions, said Chinese property buyers are an “unstoppable juggernaut”. In some markets with large Mandarin-speaking populations, locals can spot real-estate ads in Mandarin at bus stations and benches in the surrounding area.

…click on the above link to read the rest of the article…

US Debating Whether To Expand Military Presence In Yemen

June 6, 2018

US Debating Whether To Expand Military Presence In Yemen

As if the US hasn’t already done enough to exacerbate the humanitarian crisis raging in Yemen, the Wall Street Journal reported Monday that the Trump Administration is considering a request by the United Arab Emirates for “direct US support” as a coalition of Sunni majority nations prepares to seize the country’s biggest port, known as Hodeidah.

According to WSJ, Secretary of State Mike Pompeo has requested an evaluation of the Sunni coalition’s plan to retake control of the port. And with good reason: That’s because some 90% of the imported goods including foodstuffs, medicine and other vital supplies flow into Yemen through the port. Already, the country is under an extreme humanitarian crisis, and cutting off the flow of supplies through the port could make it infinitely worse.

Secretary of State Mike Pompeo has asked for a quick assessment of the UAE’s plea for assistance such as surveillance drone flights to help a Saudi-led coalition retake Hodeidah, which currently serves as a vital lifeline for the country’s 29 million residents, U.S. officials said.

U.A.E. and Saudi Arabian officials have assured the U.S. that they won’t try to seize the Red Sea port until they get backing from Washington, American officials said. But there is growing concern in the Trump administration that fighting around the city could spiral out of control and force Washington’s hand. Yemeni fighters backed by the coalition are battling Houthis near the city.

“We continue to have a lot of concerns about a Hodeidah operation,” said one senior U.S. official. “We are not 100% comfortable that, even if the coalition did launch an attack, that they would be able to do it cleanly and avoid a catastrophic incident.”

…click on the above link to read the rest of the article…

Why I Think the Stock Market Cannot Crash in 2018

May 14, 2018

Why I Think the Stock Market Cannot Crash in 2018

But the crash-insurance policy is a one-time deal. And then what?

The 85% of S&P 500 companies that have reported earnings so far disclosed they’d bought back $158 billion of their own shares in Q1, according to the Wall Street Journal. The quarterly record of $164 billion was set in Q1 2016. If the current rate applies to all S&P 500 companies, they repurchased over $180 billion of their own shares in Q1, thus setting a new record:

At this trend, including a couple of slower quarters, S&P 500 companies are likely to buy back between $650 billion and $700 billion of their owns shares in 2018. This would handily beat the prior annual record of $572 billion in 2007. Here are the top buyback spenders in Q1:

Apple: $22.8 billion
Amgen: $10.7 billion
Bank of America: $4.9 billion
JPMorgan Chase: $4.7 billion
Oracle: $4 billion
Microsoft: $3.8 billion
Phillips 66: $3.5 billion
Wells Fargo: $3.34 billion
Boeing: $3 billion
Citigroup: $2.9 billion

Buybacks pump up share prices in several ways. One is the pandemic hype and media razzmatazz around the announcements which cause investors and algos to pile into those shares and create buying pressure. Since May 1, when Apple announced mega-buybacks of $100 billion in the future, its shares have surged 11%. The magic words.

Other companies with big share buyback programs have also fared well: Microsoft shares are up 14% year-to-date. And if buybacks don’t push up shares, at least they keep them from falling: Amgen shares are flat year-to-date.

Shares of the 20 biggest buyback spenders in Q1 are up over 5% on average year-to-date, according to the Wall Street Journal, though the S&P 500 has edged up only 2%.

Share buybacks also prop up prices because they create buying pressure by the company itself when it finally does buy the shares. This is the only entity in the market that doesn’t want to buy low.

…click on the above link to read the rest of the article…

Economists Who Push Inflation Stunned That Rising Home Prices Put Buyers Deeper Into Debt

April 11, 2018

Economists Who Push Inflation Stunned That Rising Home Prices Put Buyers Deeper Into Debt

Once again, when the government intervenes – this time in housing – the left hand is starting a fire that the right hand is trying to put out.Rising prices for homes are once again pricing out prime borrowers and nobody can “figure out” why this is happening.

It is news like this article reported this morning by the Wall Street Journal that continues to perpetuate the hilarious notion of Keynesian economics as giving a job to one man digging a hole and another job to another man filling it, simply so that they both have jobs.

There is nothing funnier (or sadder) than “economists” struggling to understand how housing prices got so high and why people are taking on more debt in order to purchase them. However, that is the great mystery that the Wall Street Journal reported on Tuesday morning, making note of the fact that people are “stretching“ in order to purchase homes. What’s the solution to this problem? How about just easing lending standards again? After all, what could go wrong?

Apparently blind to the obvious – that forced inflation could amazingly make things more expensive relative to income – “economists” have hilariously blamed this price/debt delta on lack of supply. Of course, no one has mentioned the credit worthiness of borrowers getting worse or the fact that homes prices are being manipulated in order to offer home ownership to people who otherwise may not be in the market.

More Americans are stretching to buy homes, the latest sign that rising prices are making homeownership more difficult for a broad swath of potential buyers.

…click on the above link to read the rest of the article…

Tag Archives: Wall Street Journal

Content

Post categories

Economic Links

Energy/Resource Links

Environmental Links

Geopolitical Links

Liberty Links

News Links

Other Links

Survival Skills

Post Archives by Category

Post navigation

Latest Posts