President Biden Celebrates 'Making Progress' On Inflation Despite High Inflation And The Stock Market's Worst Day In Two Years

Wall Street's major stock indexes dropped sharply at the opening bell on Tuesday, as the latest inflation data sparked fears that the Fed with continue its aggressive path of rate hikes

 

Daily Mail: Biden's stumbling victory lap! President celebrates 'making progress' on inflation despite stock market's worst day in two years - before treading on his own jacket! 

* Biden celebrated his climate change and prescription drug prices law at the White House with big event on South Lawn 

* As Biden spoke, the Dow lost more than 1,250 points and the S&P 500 sank 4.3% 

* Event was to have a dual purpose: to tout to voters - as the November election approaches - that Biden and his party can get things done 

* Biden slammed Republicans for not supporting Inflation Reduction Act 

* Event came as inflation remained steady in August at 8.3 percent 

* Biden took off his suit jacket on hot, sunny day - and then stepped on it 

President Joe Biden's victory lap for his climate change and prescription drug prices law took a stumble on Tuesday as he celebrated its passage at the White House while the stock market had its biggest tumble in two years. 

As Biden spoke, the Dow lost more than 1,250 points and the S&P 500 sank 4.3% after Tuesday's report that inflation remained essentially stagnant in August, coming in at 8.3 percent. 

'We're making progress,' Biden said in his speech on the South Lawn of the White House.  

Read more ....  

Update #1: Markets shudder on dashed inflation hopes; Dow falls 1,250 (AP)  

Update #2: Dow Jones plunges amid news of US inflation rates (The Guardian)  

WNU Editor: Interest rate increases are next .... Inflation is up 8.3% since last year—and more Fed rate hikes are likely looming (CNBC).

Euro And The US Dollar Are At Parity For The First Time In 20 Years

 

CNN: The euro and the US dollar are at parity for the first time in 20 years 

New York (CNN Business)For the first time in 20 years, the exchange rate between the euro (EUU) and the US dollar has reached parity -- meaning the two currencies are worth the same. 

The euro hit $1 on Tuesday, down about 12% since the start of the year. Fears of recession on the continent abound, stoked by high inflation and energy supply uncertainty caused by Russia's invasion of Ukraine. 

The European Union, which received roughly 40% of its gas through Russian pipelines before the war, is attempting to reduce its dependence on Russian oil and gas. At the same, Russia has throttled back gas supplies to some EU countries and recently cut the flow in the Nord Stream pipeline to Germany by 60%. 

Read more .... 

WNU Editor: The British pound is also reaching new lows against the US dollar .... Euro nears parity with dollar as pound hits two-year low (The Guardian). 

You can check the current US/Euro rate here (link here). 

Euro And The US Dollar Are At Parity For The First Time In 20 Years 

Euro takes a breather after teetering on the brink of dollar parity -- CNBC  

Euro reaches parity with dollar for the first time in 20 years -- Euronews  

Euro Buyers Emerge in Last-Gasp Defense of Dollar Parity Level -- Bloomberg  

Dollar stronger than euro for first time in 20 years -- RT

5 Threats To The Global Economy In 2022

Global economic recovery has lost momentum due to pandemic-induced supply chain disruptions  

DW: 5 threats to the global economy in 2022  

The global economic recovery is being held back by the ongoing COVID pandemic. However, the mutating coronavirus is just one of the main risks which could dampen investor spirits in the coming year. 

The global economy recovered strongly in 2021 from its pandemic lows, only to lose some of its steam in the second half thanks to fresh pandemic outbreaks, supply chain bottlenecks, labor shortages and a slow rollout of COVID-19 vaccines, especially in low-income developing countries. 

The slowing recovery prompted economists at the International Monetary Fund (IMF) and the 38-member Organization for Economic Cooperation and Development (OECD) to slightly trim their global growth forecasts for the year in October and December respectively. 

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WNU Editor: I would add energy (specifically lack of) to the list.

Wall Street Ends Sharply Lower Over Concerns That The Delta Variant Will Hold Back The Global Economy

Stocks sank on Monday with the Dow plunging more than 800 points as investors feared a surge in COVID-19 cases caused by the Indian Delta variant could hold back the global economy  

Daily Mail: The Dow plunges nearly 800 points in midday trading as investors fear Indian Delta variant could hold back the global economy 

* The Dow Jones Industrial Average was down 786 points as of midday on Monday 

* The S&P 500 fell 1.6% in the first half hour of trading, after setting a record high just a week ago. The Nasdaq composite was 1.5% lower 

* Airlines, hotels and stocks of other companies that would get hurt the most by potential COVID-19 restrictions were taking the heaviest losses 

* Financial markets have been showing signs of increased concerns for a while, but the U.S. stock market had remained largely resilient 

* The drop was global with several European markets down more than 2% 

Stocks sank on Monday with the Dow plunging nearly 800 points as investors feared a surge in COVID-19 cases caused by the Indian Delta variant could hold back the global economy. 

The Dow Jones Industrial Average was down 786 points, or 2.2 percent, as of midday EST. 

The S&P 500 was 1.5 percent lower in midday trading, after setting a record just a week earlier.

The Nasdaq composite was 0.9 percent lower. 

 In another sign of worry, the yield on the 10-year Treasury dropped close to its lowest level in five months. It touched 1.21 percent as investors scrambled for safer places to put their money.  

Read more ....  

WNU Editor: It looks like the markets are factoring in the very real possibility that we are going to be facing another Covid wave in the coming months. 

More News On Today's Wall Street Close  

Dow sinks 2% as virus surge stifles recovery hopes -- Reuters 

Dow tumbles 700 points for its worst drop since October as investors fear a Covid resurgence -- CNBC

Dow suffers biggest drop of the year as Delta variant fears hit Wall Street hard -- CNN  

Wall Street ends sharply lower as Delta variant sparks new lockdown fears -- AP

German Chancellor Angela Merkel Warns The European Union Is Facing Its Deepest Recession Since World War II

The Hill: German Chancellor Merkel warns EU of deepest recession since World War II

German Chancellor Angela Merkel warned that the European Union is approaching their deepest recession since World War II.

“The pandemic shows us how vulnerable Europe is,” Merkel told the European Union on Thursday, the Financial Times reported. “Therefore I want to stress to you that cohesion and solidarity in Europe were never as important as they are today.”

Read more ....

Update: Angela Merkel fears economic crisis is being underestimated in EU (The Guardian)

WNU Editor: The problem for most European countries is that they are already experiencing unsustainable debt levels. She can talk all that she wants on European unity, but most European countries do not have the financial resources to make it happen.

Is The Economy Coming Back?

FILE PHOTO: The New York Stock Exchange (NYSE) is seen in the financial district of lower Manhattan during the outbreak of the coronavirus disease (COVID-19) in New York City, U.S., April 26, 2020. REUTERS/Jeenah Moon

WSJ: For Economy, Worst of Coronavirus Shutdowns May Be Over

Recovering air travel, hotel bookings and mortgage applications are among the early signs the U.S. economy is slowly creeping back to life.

Truck loads are growing again. Air travel and hotel bookings are up slightly. Mortgage applications are rising. And more people are applying to open new businesses.

These are among some early signs the U.S. economy is, ever so slowly, creeping back to life.

Plenty of data show the country was still mired in a severe downturn in April and May, with overall business activity falling and layoffs rising—though more slowly than in the early weeks of the coronavirus crisis. Current projections have the economy contracting by 6% to 7% this year and unemployment lingering in double-digit percentages for a while. But, for the first time since the pandemic forced widespread U.S. business closures in March, it appears conditions in some corners of the economy aren’t getting worse, and might even be improving.

“If this is the only wave [of coronavirus], it looks like we’ve bottomed out and the normalization process has begun,” said Beth Ann Bovino, U.S. chief economist at S&P Global Ratings.

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WNU Editor: I am using China's economic return  as my reference point on how other economies will/may come back. Currently in China .... manufacturing is coming back, but retail, housing, hospitality, restaurants, travel, they are all coming back but very slowly. Interesting .... public transportation is a fraction of what it use to be. I guess people are preferring to use their cars and/or are car pooling. On a more positive note. The enormous job loses that occured in China at the beginning of the year are now reversing.

Here Are The World's 20 Most Profitable Companies

Zero Hedge: Visualizing The World's 20 Most Profitable Companies

The biggest chunk of the earnings pie is increasingly split by fewer and fewer companies.

In the U.S. for example, Visual Capitalist's Jeff Desjardins points out that about 50% of all profit generated by public companies goes to just 30 companies — back in 1975, it took 109 companies to accomplish the same feat:

This power-law dynamic also manifests itself at a global level — and perhaps it’s little surprise that the world’s most profitable companies generate mind-bending returns that would make any accountant blush.

Read more ....

WNU Editor: Four Chinese companies are now in the top 10.

Apple To Repatriate $350 Billion From Overseas Back To The U.S. Economy

Apple CEO Tim Cook says the iPhone maker's repatriated profits will result in a $38 billion US tax payment and generate $350 billion in economic activity

CNBC: Apple announces plans to repatriate billions in overseas cash, says it will contribute $350 billion to the US economy over the next 5 years

* Apple says the new tax law will help it will contribute $350 billion to the U.S. economy over the next five years.
* It says it will create 20,000 new jobs and open a new campus.
* Apple expects to pay about $38 billion in taxes for the horde of cash it plans to bring back to the United States.

Apple on Wednesday made a slew of announcements about its investment in and contribution to the U.S. economy in part because of the new tax law.

The headline from Apple is that it will make a $350 billion "contribution" to the U.S. economy over the next five years, although it's unclear exactly how the company came to that number.

The company also promised to create 20,000 new jobs and open a new campus.

It said it expects to pay about $38 billion in taxes for the horde of cash it plans to bring back to the United States. This implies it will repatriate virtually all of its $250 billion in overseas cash.

Read more ....

Update: Apple says will pay $38 bn in taxes on repatriated profits (AFP)

WNU Editor: Apple is already the largest taxpayer in the U.S.. One can only imagine the enormous economic benefits that such a transfer of wealth from overseas to the U.S. economy will bring .... and I am willing to bet that Apple will not be the only company doing this. The global economic and geopolitical impacts from changes in U.S. tax and regulatory should never be underestimated .... and Apple is a perfect example of this point.

Apple To The EU: You Can Have Taxes Or You Can Have Jobs, But You Cannot Have Both

Business Insider: Apple: You can have taxes or you can have jobs, but you can't have both

Apple's official statement on the EU ruling against its Irish tax arrangements tells you all you need to know about what is at stake: You can have taxes, or you can have jobs, but Apple is in no mood to deliver both.

After learning this morning that the EU expects Apple to pay €13 billion (£11 billion, $14.5 billion) in back taxes, the company said, "it will have a profound and harmful effect on investment and job creation in Europe."

That is not a threat, technically. But it will be seen as one by EU politicians who want to attract new companies to their countries.

Read more ....

WNU Editor: When I was in Russia two weeks I spent a day at an economic forum discussing what direction should the Russian government take on its economy (this is my idea of a working vacation). I said the same thing .... what is more important for the Russian government .... taxes or jobs. In the case of Moscow .... they choose jobs .... because while times may be tough in Russia .... everyone is at least working. In the case of the EU and Ireland .... Ireland prefers the jobs (and they appear to be well paying jobs), but the EU prefers the taxes because in their minds they know how to create jobs better than companies like Apple, and besides .... in their mind a company like Apple has a lot of cash. My prediction .... Apple will pay the tax, but expect less jobs in Ireland. This also opens an avalanche of other tax cases .... expect more rulings and judgements in the months and years to come against multinationals and state run companies that operate in the EU .... Saudi Arabia's Aramco with its mega billions from its petro-sales comes to mind..

Putting The U.S. Economy Into Perspective With The Rest Of The World

Which Countries Match The GDP And Population Of America's States? -- The Economist

IT HAS long been true that California on its own would rank as one of the biggest economies of the world. These days, it would rank eighth, falling between Italy and Brazil on a nominal exchange-rate basis. But how do other American states compare with other countries? Taking the nearest equivalent country from 2009 data reveals some surprises. Who would have thought that, despite years of auto-industry hardship, the economy of Michigan is still the same size as Taiwan's?

Read more ....

My Comment: A cool interactive map .... check it out here.

Are We Becoming Like Argentina?

Barack Obama Accused Of Making 'Depression' Mistakes -- The Telegraph

Barack Obama is committing the same mistakes made by policymakers during the Great Depression, according to a new study endorsed by Nobel laureate James Buchanan.

His policies even have the potential to consign the US to a similar fate as Argentina, which suffered a painful and humiliating slide from first to Third World status last century, the paper says.

There are "troubling similarities" between the US President's actions since taking office and those which in the 1930s sent the US and much of the world spiralling into the worst economic collapse in recorded history, says the new pamphlet, published by the Institute of Economic Affairs.

Read more ....

My Comment: The Chinese agree .....

IMF Sees Global 2009 Recession as Advanced Economies Contract

Wall Street Journal:

The International Monetary Fund slashed its growth forecasts for the world economy yet again Thursday, while calling for more broad-based action to mitigate the financial crisis and boost growth.

The IMF now sees the global economy slowing to 3.7% this year and 2.2% next year, well below the 3% level the fund considers the threshold for a world recession. Just last month, the IMF trimmed its 2008 forecast to 3.9% growth from 4.1%, while reducing its 2009 estimate to 3% from 3.9%.

Read more ....