Economy

China’s Economy Weakens as Trade Fight Heats Up, Emboldening Xi’s Critics

China’s ability to go toe to toe with the United States in the ongoing trade dispute was cast into doubt by economic data released this week showing an economy that had slowed down by far more than expected. Fixed income investment, which includes spending on machinery and infrastructure, rose 5.5 percent compared with a year ago, down from 6.0 percent in the prior month. Economists had expected 6.0 percent. It was the lowest level of fixed income investment growth since 1999, before China ascended to the World Trade Organization. Industrial production was up 6.0 percent, below the 6.3perrcent forecast. Unemployment rose to 5.1 percent last month, up from 4.8 percent in June. Retail sales annual gains were expected to rise from June’s 9.0 percent to 9.2 percent. Instead, sales fell to 8.8 percent.

Clearly China has FAR more to lose in this trade dispute than America does.  Maybe Trump’s tariffs strategy IS working after all..  For more, click on the text above.

Consumer Confidence Rises Toward 18 Year High Again

The confidence of American consumers is riding higher. Consumer confidence rose by more than expected in July, according the Conference Board. The consumer confidence index rose to 127.4 in July, four-tenths of a percentage point above expectations. June’s reading was revised up from 126.4 to 127.1, indicating confidence was even stronger in June than previously thought. While the July reading was below the recent high of 130 it is very high by historical standards. “Consumers’ assessment of present-day conditions improved, suggesting that economic growth is still strong,” said Lynn Franco, Director of Economic Indicators at The Conference Board.“However, while expectations continue to reflect optimism in the short-term economic outlook, back-to-back declines suggest consumers do not foresee growth accelerating.” That’s likely an accurate assessment. The economy grew at a 4.1 percent pace in the second quarter, the highest level since 2014. It’s unlikely to accelerate to an even higher growth rate in the remainder of the year. Consumers views of current conditions improved further in July. Just 10.1 percent say business conditions are “bad, down from 11.5 percent a month earlier. Those business conditions are “good” rose to 38.0 percent from 37.2 percent. The view of the labor market was also improved. Those claiming jobs are “plentiful” increased to 43.1 percent from 40.4 percent. Only 15 percent describe jobs as “hard to get”—unchanged from June.

More great economic news in this Trump economy!!    🙂

Apple’s Revenue, Earnings Top Estimates

Apple Incc. delivered its best-ever revenue for the June quarter, typically its weakest period, as demand for high-price iPhones remained resilient and services like app-store sales swelled to all-time highs. The results for Apple’s fiscal third quarter show how the world’s most valuable company is finding ways to grow amid a contracting global smartphone market that is roiling its rivals. “Growth was strong all around the world,” Apple finance chief Luca Maestri said during an interview. Though iPhone sales usually weaken in the spring and summer as anticipation builds for new devices expected in September, Mr. Maestri said demand has remained consistent, particularly for the iPhone X, 8 and 8 Plus. “Customers are really valuing the features in the products,” he said. Shares of Apple, up 28% over the past year, rose 3.6% to $197.01 in after-hours trading. Apple’s move to raise iPhone prices continued to pay off in the period with sales of its flagship product rising 20% to $29.91 billion even as shipments rose less than 1% to 41.3 million. Meanwhile, the company’s services business reported record revenue of $9.55 billion, a 31% increase from a year ago, strengthening the case that Apple is in the midst of a transformation from a device-driven business into one increasingly reliant on sales of subscriptions and software. The combination drove total revenue up 17% to $53.26 billion in the latest period, above Wall Street expectations and near the high end of its own guidance. Profit rose 32% to $11.52 billion, or $2.34 a share, also above analysts’ consensus estimates. Apple signaled it expects to sustain strong iPhone sales in the current quarter with a forecast for total revenue of between $60 billion and $62 billion, which would represent a healthy 14% to 18% increase from a year ago. The expected jump reflects a small boost from a trio of new devices the company is expected to release in September, analysts say, including an update to the $999 iPhone X, its first oversize phone with an organic light-emitting diode, or OLED, display and a 6.1-inch LCD phone with facial recognition technology. The new phones are projected to be priced between $699 for the LCD device and $1,099 for the plus-size handset, according to UBS, potentially ensuring another year of higher average iPhone prices to lift Apple’s total revenue. Analysts had estimated the $999 iPhone X made up one-quarter of total iPhones sold, which helped lift average selling prices per iPhone by nearly 20% to about $724. While sales of the company’s handsets have been more pedestrian so far this fiscal year than the more than 7% increase in annual iPhone shipments many analysts forecast a year ago, features like the iPhone X’s facial recognition and edge-to-edge display have been enough to help Apple deliver modest growth and revive a China business mired in a multiyear slump. The company said revenue in Greater China, where sales tanked in 2016, rose 19% to $9.55 billion. Apple’s chief rival, Samsung Electronics Co. , hasn’t fared as well. The South Korean company, which also has raised smartphone prices to nearly $1,000, reported a big decline in mobile phone profits on Tuesday as consumers hold on to devices longer and balk at higher prices. Samsung has seen its market share in China fall as homegrown rivals like Huawei Technologies Co. increase sales.

Opinion/Analysis: Mr. Trump, the GDP number looks great! Now, let’s do this for Trumponomics’ next act

This week’s Wall Street Journal/NBC News poll found 50 percent of those surveyed back President Trump’s handling of the economy. That number may rise with Friday’s news that U.S. gross domestic product (GDP) soared in the second quarter of this year by 4.1 percent. That kind of growth makes it almost certain the country will see more than a 3 percent rate economic growth this year – the first time that’s happened since before the financial crisis of 2008. That will prompt President Trump and other supporters of the 2017 tax cut bill to claim that the tax cut the president signed into law ushered in a new era of prosperity. The growth being produced by the tax cut is bringing in more revenues. Dan Clifton of Strategas Research Partners calculates using estimates by the Congressional Budget Office that the tax cut has already paid for about 30 percent of its static revenue losses. Sen. David Perdue, a Georgia Republican, told reporters Thursday that “the “pullback of regulations – the energy work that we did, the tax work and the Dodd-Frank” reforms of financial regulations have all helped propel economic growth. Kevin Hassett, the chair of the president’s Council of Economic Advisers, says the contrast with pre-Trump economic results is clear. The country is in the midst of a building boom, with investment in structures up 16 percent from 2017. Total business fixed investment has increased 10 percent, up from 6 percent last year. Most importantly, real disposable income has increased by 3 percent this year following last year’s gain of 2.3 percent. Many American families are seeing the first real increases in take-home pay in over a decade. Democrats are likely to gather around tubs of sour grapes with the release of the good economic good news. After all, Senate Majority Leader Chuck Schumer, D-N.Y., stood on the Senate floor last January before President Trump’s State of the Union message to declare: “Here are two words we will not hear President Trump say tonight about the economy – ‘Thanks, Obama!’ – because much of the growth in 2017 was created by President Obama’s policies and, by many measures, the growth under President Obama was better than under President Trump.” Expect Schumer and his allies to point to rising gasoline and health-care costs to put a damper on the economic growth numbers. Supporters of Trump economic policies acknowledge the economy faces challenges, including higher interest rates that will boost federal debt payments and runaway entitlement programs. But they say the way to address those is to push for more tax and regulatory reform to further boost growth. “After the JFK tax cuts we routinely saw 6 percent growth in the 1960s, with a stable dollar and low inflation. In the 1980s, Reagan delivered quarters with 8 percent growth, even as inflation fell,” says Stephen Moore of the Heritage Foundation. “Trump’s policies have produced the best of all economic worlds – surging growth and employment, with little inflation and a rising dollar.” Moore added. “The sports truism applies here: Never, ever change a winning strategy.” So what should be the Second Act of Trumponomics to keep the economic expansion going? First, Congress should make the 2017 tax cuts permanent, giving even more assurance to businesses that economic policy will be stable. Congress should also revisit efforts to reshape ObamaCare to help rein in rising health care costs. But an even bolder approach would be for the White House to initiate a capital gains tax cut that wouldn’t require endless wrangling with a polarized Congress. Using an executive order to eliminate the tax on inflationary capital gains makes sense on the grounds of both growth and fairness.

Agreed!!  To read more of this outstanding op/ed by John Fund over at the Wall Street Journal, click on the text above.  Excellent!!    🙂

Trump could deliver a second tax cut — without having to deal with Congress. Here’s how

What if President Trump had the authority—on his own—to enact a second powerful tax reform? He does. The momentum is building for him to use it. In the halls of Congress, the corridors of the administration, and the nerve centers of activist groups, forces are aligning behind a plan: a White House order to index capital gains for inflation. It’s a long-overdue move—one that would further unleash the economy and boost GOP election prospects. And Mr. Trump could be the president bold enough to make it finally happen. At President Reagan’s behest, Congress in the 1980s indexed much of the federal tax code for inflation. Oddly, capital gains weren’t similarly treated. The result is that businesses and individuals pay taxes on the full nominal amount they earn on investments, even though inflation eats up a good chunk of any gain. It’s not unheard of for taxes to exceed real gains after inflation. The result is significant capital distortion, as companies sit on buildings and property or investors sit on stock—rather than selling and thereby putting both assets and gains to more productive use. Conservatives have understood this problem for decades, yet for decades they have been held hostage to a 1992 government brief. The paper by the Justice Department’s Office of Legal Counsel offered a few faulty arguments as to why the Treasury lacked the authority to make this regulatory change. Neither President Bush questioned it, but others have.

To read the rest of this outstanding op/ed by Wall Street Journal editor Kimberley Strassel, click on the text above.  President Trump really needs to take her great advice.  She’s right.  He’s the only president bold enough to make such a move.  And, it’d be the right one.  Excellent!!     🙂

Stock rally continues following jobs report

Stocks jumped to start the week, adding to gains from Friday’s session that was powered by a better-than-expected jobs report. The Dow Jones Industrial Average surged 320.11 points, or 1.3%, to 24,776.59. The S&P 500 gained 24.35 points, about 0.9%, to 2,784.17. The Nasdaq Composite rose 67.81 points, or 0.88%, to 7,756.20. Chinese shares bounced despite heightened trade tensions between Washington and Beijing after each imposed major tariffs on the other’s goods last week. The Shanghai Composite ended the session 2.5%, its biggest one-day rise in 2-years. Hong Kong’s Hang Seng Index was higher by 1.5% Japan’s Nikkei ended the day up 1.21% In Europe, London’s FTSE traded 0.35% higher, Germany’s DAX gained 0.12% and France’s CAC was higher by 0.40% Stocks also rose Friday after a strong jobs report overshadowed U.S.-China tariffs. The Dow Jones Industrial Average climbed 99.74 points, or 0.41%, to 24,456.48. The S&P 500 climbed 23.21 points, or 0.84%, to 2,759.82. The Nasdaq Composite rallied 101.96 points, or 1.34%, to 7,688.39. The U.S. economy added 213,000 jobs in June with the unemployment rate rising to 4%. Wage growth remained steady at 2.7% even though hourly wages inched higher by 0.2%. Economists surveyed by Thomson Reuters expected the U.S. economy would have added 195,000 jobs in June with the unemployment rate holding steady at May’s 3.8%, which was the lowest since April 2000. Investors are looking ahead to Friday when the earnings season for banks gets underway. Citigroup, JPMorgan Chase and Wells Fargo will all report results on that day. Commodities were mostly higher.

Record 155,576,000 Employed in June; 10th Record for Trump

“Our economic policy can be summed up in three very simple but beautiful words,” President Donald Trump told a rally in Montana Thursday evening: “Jobs, jobs, jobs,” he said. On Friday, the Labor Department’s Bureau of Labor Statistics said the economy added 213,000 jobs in June, a strong number; the number of employed Americans, 155,576,000, set its tenth record of the Trump presidency; but the number of unemployed Americans (which includes people who are actively looking for jobs) increased by almost half-a-million. The unemployment rate increased two tenths of a point to 4.0 percent. In June, the nation’s civilian noninstitutionalized population, consisting of all people age 16 or older who were not in the military or an institution, reached 257,642,000. Of those, 162,140,000 participated in the labor force by either holding a job or actively seeking one. The 162,140,000 who participated in the labor force equaled 62.9 percent of the 257,642,000 civilian noninstitutionalized population, a slight increase from last month’s 62.7 percent. Overall, the labor force participation rate has been trending down since its record high of 67.3 percent in the first quarter of 2000. According to the Congressional Budget Office, “A lower labor force participation rate is associated with lower gross domestic product and lower tax revenues. It is also associated with larger federal outlays, because people who are not in the labor force are more likely to enroll in certain federal benefit programs.” While the participation rate remains stagnant, the number of Americans not in the labor force – those neither working nor looking for a job – remained stubbornly high last month, at 95,502,000, partly because members of the Baby Boom generation are retiring in increasing numbers. This number has increased seven times since Trump took office. Among the major worker groups, the unemployment rates for adult men (3.7 percent), adult women (3.7 percent), and Asians (3.2 percent) and Blacks (6.5 percent, up from a record low of 5.9 percent) increased in June. The jobless rate for teenagers (12.6 percent), and Whites (3.5 percent) showed little or no change over the month. In June, a record 27,077,000 Hispanics were employed, and the unemployment rate for this group, 4.6 percent, has never been lower. Average hourly earnings for all employees on private nonfarm payrolls rose by 5 cents to $26.98 last month. Over the year, average hourly earnings have increased by 72 cents, or 2.7 percent. The change in total nonfarm payroll employment for April was revised up from +159,000 to +175,000, and the change for May was revised up from +223,000 to +244,000. With these revisions, employment gains in April and May combined were 37,000 more than previously reported.

More great jobs numbers in this Trump economy!!    🙂