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Global Weekly Economic Update | Deloitte Information
Real business fixed investment increased at a rate of 2.9%. This included a 2.1% increase in business equipment (the first increase in three quarters, fueled by investment in information technology and offset by a sharp drop in investment in transportation equipment), a 0.1% decline in structures and a 5.4% increase in intellectual equipment. ownership (which includes software and R&D). Real investment in residential properties increased at a rate of 13.9%. On the other hand, a decline in business inventories reduced real GDP growth by 0.35 percentage points. The increase in investment in information technologies was the strongest since the first quarter of 2022. This bodes well for demand for consulting services.
However, although real exports of goods and services increased by 0.9%, imports increased by 7.2%. This means that net exports made a negative contribution to GDP growth. Furthermore, while state and local government purchases increased at a rate of 2%, actual federal purchases fell by 0.2%.
Although real GDP grew more slowly than expected in the first quarter, the main components performed very well. Final sales to private domestic buyers (which exclude the impact of trade, government and stocks) increased at a rate of 3.1%. This was the second fastest growth rate since the fourth quarter of 2021, when the economy was recovering from the pandemic recession. Thus, the news about economic growth remains relatively good. Furthermore, news reports suggest that the United States continues to be a prime engine for global economic growth. Still, the weak headline number evidently spooked investors.
- The US government also Published data on household income, consumer spending and the Federal Reserve’s favorite measure of inflation. While the news on household spending was good, investors focused mainly on inflation numbers.
Specifically, it was reported that the personal consumption expenditures deflator (PCE deflator) rose 2.7% in March from the previous year, up from 2.5% in February. This was the first acceleration of the index since September 2023. However, when volatile food and energy prices are excluded, the core PCE deflator rose 2.8% in March compared to the previous year, the same as in February. Underlying inflation has remained relatively stable for four months, suggesting that the previous slowdown has been halted.
The problem of inflation continues to be with services, which require intensive labor. Thus, the problem is the tight labor market, which is generating significant wage gains. Specifically, prices for durable goods fell 1.9% year-on-year, while prices for non-durable goods rose just 1.3%. This included food, which rose just 1.5%. However, service prices rose 4% year-on-year, virtually unchanged over the past five months.
As such, it is not surprising that future prices are implying a 60% probability that the Fed will begin cutting rates in September. Furthermore, they only imply a 50% probability of a second rate cut in 2024. This is a stark change from just a few months ago, when investors expected the Fed to start in June and deliver three to four cuts in 2024. The change in investor expectations reflects the persistent tightness of the labor market and the strong underlying demand in the economy. Investors evidently believe that the Fed will not ease monetary policy while the economy is so strong and underlying inflation is stagnant.
Meanwhile, the US government also reported that although real personal disposable income increased 0.2% from February to March (the fastest growth since December), real personal consumer spending increased 0.5%, the same as in the previous month. Therefore, families continue to reduce savings to allow for strong increases in expenses. The personal savings rate fell from 3.6% in February to 3.2% in March.
- The Federal Reserve intends to keep interest rates high for longer, in large part because the US labor market has remained unusually tight, thus generating wage gains that drive inflation in services. So any indication that the labor market is easing would be good news for the Fed. The latest data suggested that tension in the job market is decreasing. The government reported a sharp slowdown in employment growth in April, although this remains above the expected long-term trend. Furthermore, wage growth in April declined. Let’s look at the data.
O US government report on employment includes results from two surveys: one is a household survey and the other is an establishment survey. The establishment’s research found that, in April, 175 thousand new jobs were created. This was the slowest job growth since October 2023. On the other hand, March growth was revised upwards to 315,000, an unusually strong number. One month doesn’t make a trend. However, if the slower growth observed in April persists in the coming months, it will likely be a sign of an easing of tension in the labor market. This, in turn, could influence the Federal Reserve’s decisions.
By industry, there was very modest growth in employment in goods-producing industries (mining, construction, manufacturing). There has been a decline in employment in information as well as professional and business services and there has been very modest growth in financial services, leisure and hospitality and government. Moderately strong growth occurred in wholesale trade, retail trade and transport. But the strongest growth has been in health care and social assistance. Overall, April was a relatively weak month for job growth.
The establishment survey also includes data on wages. The report states that in April, the average hourly earnings of all workers increased by just 3.9% compared to the previous year, the smallest increase since March 2021. So wage pressure is evidently easing. However, it remains too high given the Fed’s 2% inflation target. If productivity increased quickly, companies could raise wages without raising prices, since they would get more from each worker. However, as indicated below, productivity growth stagnated in the first quarter.
Finally, the household survey indicated that, in April, employment grew more slowly than the active population, thus leading to an increase in the unemployment rate to 3.9%, still a very low level.
- The US government also reported on labor productivity in the first quarter. Remember that, in the three most recent quarters, labor productivity (production per hour worked) increased rapidly. This was useful in reducing inflation. It also contributed to strong economic growth. The increase in productivity in 2023 was probably related to business investments in technologies that save and increase labor, a response to the restrictiveness of the labor market.
However, in the first quarter of 2024, labor productivity has almost stagnated. Productivity increased by just 0.3% from the fourth quarter of 2023 to the first quarter of 2024. This followed strong growth of 3.5% in the previous quarter. The result was that, as wages continued to rise, unit labor costs (UTC) accelerated sharply in the first quarter. ULC denotes the labor cost to produce a unit of output. It is calculated as real hourly earnings (adjusted for inflation) divided by productivity. Thus, if productivity increases at the same rate as real wages, then ULC remains unchanged. This implies that companies do not need to increase prices in line with wage increases.
In the second half of 2023, ULC remained largely unchanged as productivity gains offset real wage gains. However, in the first quarter, CUT increased by 4.7% compared to the previous quarter. Furthermore, CUT increased faster in services than in manufacturing. This is not good news for suppressing inflation, especially given that most of the remaining inflation comes from the services sector.
The spotlight next week will shift somewhat to the Federal Reserve’s second-quarter earnings season and monetary policy. Market watchers will be treated to results from several major names, including Dow 30 components Goldman Sachs (GS), UnitedHealth (UNH), Johnson & Johnson (JNJ) and American Express (AXP), along with streaming giant Netflix (NFLX).
The Fed will still attract some attention as investors will be eager to hear from a packed lineup of central bank speakers just before the policy meeting lockout period.
In terms of the economic calendar, after fifteen days of labor market and inflation indicators, activity data will gain momentum in the form of the latest retail sales and industrial production reports.
Earnings Highlight: Monday, July 15 – Goldman Sachs (GS) and BlackRock (Black). See the full earnings calendar.
Earnings Highlight: Tuesday, July 16 – UnitedHealth (UNH), Bank of America (BAC), Progressive (PGR), Morgan Stanley (IN), PNC Financial (PNC) and JB Hunt Transport (JBHT). See the full earnings calendar.
Earnings Highlight: Wednesday, July 17 – Johnson & Johnson (JNJ), US Bancorp (USB), Morgan Children (KMI), United Airlines (UAL) and Ally Financial (ALLY). See the full earnings calendar.
Earnings Highlight: Thursday, July 18 – Netflix (NFLX), Abbott Laboratories (ABT), Black stone (BX), Domino’s pizza (ZDP) and Taiwan Semiconductor Manufacturing (TSM). See the full earnings calendar.
Earnings Highlight: Friday, July 19 – American Express (AXP), Halliburton (THANKS) and Travelers (VRT (return to recoverable value)) See the full earnings calendar.
IPO Observation: Hospital and healthcare clinic operator Ardent Health Partners (TARDT), insurance service provider Twfg (TWFG) and the biotechnology company Lirum Therapeutics (LRTX) are expected to price their IPOs and begin trading next week. The analyst quiet period ends at Rectitude (RECT) to free up analysts to publish ratings.
Police cars outside the residence of Thomas Matthew Crooks, the suspected shooter at a Trump rally on Saturday, investigate the area in Pennsylvania. Following the incident, one rally attendee was killed, two rally attendees are in critical condition and Donald Trump suffered a non-fatal gunshot wound. The shooter is dead after being shot dead by the United States Secret Service. (Photo by Kyle Mazza/Anadolu via Getty Images)
Investors will initially favor traditional safe-haven assets and may lean toward trades more closely tied to former President Donald Trump’s chances of winning the White House after he survived an assassination attempt, according to market watchers.
“There will undoubtedly be some protectionist or safe-haven flows into Asia early this morning,” said Nick Twidale, chief market analyst at ATFX Global Markets. “I suspect gold could test all-time highs, we’ll see the yen being bought and the dollar, and flows into Treasuries as well.”
Early market commentary suggested Trump’s shooting at a rally in Pennsylvania on Saturday could also prompt traders to increase his likelihood of success in the November election. His support for looser fiscal policy and higher tariffs is generally seen as likely to benefit the dollar and weaken Treasuries.
An indicator of market sentiment heading into the weekend: Bitcoin surged above $60,000, likely reflecting Trump’s pro-crypto stance.
Other assets positively linked to the so-called Trump trade include stocks of energy companies, private prisons, credit card companies and health insurers.
Traders will also be closely watching market measures of expected volatility on Monday, such as those in the tariff-sensitive Chinese yuan and Mexican peso, which have begun to price in the U.S. vote.
Trump said he was shot in the right ear after a shooting at his rally. His campaign said in a statement that he was “fine” after the incident, which prompted him to rush off the stage.
“Currencies will be the first major market on Monday in Asia to react to the weekend’s shots. There’s potential for extra volatility, and getting a clear reading could be especially difficult because liquidity will be hurt by Japan’s national holiday,” said Garfield Reynolds, Asia team leader for Bloomberg Markets Live.
Strategists had already expected a volatile run-up to the election, particularly as Democrats are still agonizing over President Joe Biden’s candidacy after his poor performance in last month’s debate raised questions about his age. Investors were also grappling with the possibility that the election could end in a drawn-out dispute or political violence.
But there is little precedent for events like those in Pennsylvania. When President Ronald Reagan was shot four decades ago, the stock market plunged before closing early. The next day, March 31, 1981, the S&P 500 rose more than 1% and benchmark 10-year Treasury yields fell 9 basis points to 13.13%, according to data compiled by Bloomberg.
Bond investors should pay particular attention as the attack is likely to boost Trump’s election chances and ultimately lead to concerns about the fiscal outlook, according to Marko Papic, chief strategist at California-based BCA Research Inc.
“The bond market must at some point become aware of President Trump’s greater chances of winning the White House than any of his rivals,” Papic wrote. “And I continue to believe that as his chances increase, so too must the likelihood of a bond market revolt.”
Kyle Rodda, senior financial markets analyst at Capital.com, said he was seeing client flows into Bitcoin and gold following the shooting.
“This news marks a turning point in American policy norms,” he said. “For markets, it means safe-haven trades, but more tilted toward non-traditional safe-havens.”
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Thu, 11 Jul 2024 08:44 PM
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Thu, 11 Jul 2024 03:09 PM
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Thu, 11 Jul 2024 07:45 AM
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News / Business / Latest Business News Live Updates Today, July 11, 2024
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Jio Financial share price: Should you buy this Reliance group stock on Monday ahead of Q1 FY2024 results?
Q1 2024 Results: Jio Financial Share Price will be in focus on Monday as the Reliance Group company has a fixed board meeting on July 15, 2024 to consider and approve the company’s unaudited standalone and consolidated financial results. Trust Group company informed about the Q1 2024 Results date on Wednesday last week via an exchange filing. According to stock market experts, Jio Financial Services Limited is poised to deliver impressive Q1 results for FY25 on solid operating income. They have forecast a healthy QoQ PAT for the company in Q1 FY25.
Jio Financial Services News
Speaking on the Jio Financial Services Q1 2024 results, Manish Chowdhury, Head of Research, StoxBox, said, “We believe Jio Financial Services is poised to deliver impressive results in Q1FY25 aided by its operating income, which is likely to show robust growth driven by strong investment income, which in turn should lead to healthy PAT growth on a sequential basis. Jio Financial Services continues to make strategic moves such as launching digital products and expanding its ecosystem, with a clear focus on future growth. The company has announced plans to introduce products for lending against stocks and mutual funds, leveraging Jio’s large user base, which could be a significant growth driver in the coming quarters.”
“Furthermore, with the NBFC receiving RBI approval to become a primary investment company, Jio Financial Services is well-positioned to unlock value from its investments. Overall, we expect the company to report robust numbers in the upcoming quarter,” the StoxBox expert added.
Jio Financial Stock Target Price
Speaking about the technical outlook of Jio Financial share price, Ganesh Dongre, Senior Manager, Technical Research at Anand Rathi, said, “Jio Financial Services share price is poised to make a fresh high at the ₹260 apiece level. If the stock breaks above this mark, the Reliance Group stock could make a fresh high by touching the ₹290-₹295 zone. Hence, those with Jio Finance stock in their portfolio are advised to stick to the script by keeping a stop loss at ₹205. If the stock breaks above ₹260 decisively, then one can upgrade the stop loss at ₹240 for the near-term target of ₹295.”
On the advice to new buyers regarding Jio Financial stock, Ganesh Dongre said, “New buyers are advised to wait for the breakout. Once the stock breaks above ₹260, one can buy this Reliance Group stock at the short term target of ₹295, keeping a stop loss of ₹240 apiece.”
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage firms, and not of Mint. Investors are advised to consult with certified experts before making any investment decisions.
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