US producer prices rise 0.2%; underlying inflation muted - CNBC

U.S. producer prices increased moderately in July, lifted by a rebound in the cost of energy products, while underlying producer inflation retreated, which could allow the Federal Reserve to cut interest rates again next month.

The Labor Department said on Friday its producer price index for final demand rose 0.2% last month after nudging up 0.1% in June. In the 12 months through July the PPI increased 1.7% after advancing by the same margin in June.

Economists polled by Reuters had forecast the PPI would rise 0.2% in July and increase 1.7% on a year-on-year basis.

Excluding the volatile food, energy and trade services components, producer prices edged down 0.1% last month. That was the first decline since October 2015 and followed an unchanged reading in June. The so-called core PPI increased 1.7% in the 12 months through July after rising 2.1% in June.

The Fed, which has a 2% inflation target, tracks the core personal consumption expenditures (PCE) price index for monetary policy. The core PCE price index increased 1.6% on a year-on-year basis in June and has undershot its target this year.

Financial markets have fully priced in a rate cut following a recent escalation in the bitter trade war between the United States and China, which led to an inversion of the U.S. Treasury yield curve and raised the risk of a recession.

Muted inflation could boost expectations for a half-percentage-point cut at the Fed's Sept. 17-18 policy meeting. Worries about the trade war's impact on the U.S. economic expansion, the longest on record, prompted the U.S. central bank to lower its short-term rate last week for the first time since 2008.

U.S. tariffs on Chinese goods so far have had a marginal impact on inflation as they have mostly been on capital goods.

That could change after President Donald Trump announced last week an additional 10% tariff on $300 billion worth of Chinese imports starting Sept. 1. The new tariffs would affect mostly consumer goods.

In July, wholesale energy prices rebounded 2.3% after falling 3.1% in the prior month. They were boosted by a 5.2% percent jump in gasoline prices. Goods prices increased 0.4% last month, reversing June's 0.4% decline.

Energy prices accounted for more than 80% of the rebound in the cost of goods last month.

Wholesale food prices rose 0.2% in July after advancing 0.6% in June. Core goods prices edged up 0.1% after being unchanged for three straight months.

The cost of services fell 0.1% in July, the first decrease since January, after rising 0.4% in June. Services were pulled down by a 4.3% drop in the cost of hotel and motel rooms.

The cost of healthcare services edged up 0.1% last month after rising 0.2% in June. Those healthcare costs feed into the core PCE price index.

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2019-08-09 12:33:19Z
CBMiY2h0dHBzOi8vd3d3LmNuYmMuY29tLzIwMTkvMDgvMDkvdXMtanVseS1wcGktdXMtcHJvZHVjZXItcHJpY2VzLXJpc2UtdW5kZXJseWluZy1pbmZsYXRpb24tbXV0ZWQuaHRtbNIBZ2h0dHBzOi8vd3d3LmNuYmMuY29tL2FtcC8yMDE5LzA4LzA5L3VzLWp1bHktcHBpLXVzLXByb2R1Y2VyLXByaWNlcy1yaXNlLXVuZGVybHlpbmctaW5mbGF0aW9uLW11dGVkLmh0bWw

Stock market news: August 9, 2019 - Yahoo Finance

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S. REUTERS/Brendan McDermid

U.S. stock futures were lower Friday, as U.S.-China trade tensions continued to keep investors on edge around the world.

Here were the main moves in the market, as of 8 a.m. ET:

• S&P futures (ES=F): -0.63%, or -18.50 points

• Dow futures (YM=F): -0.55%, or -144 points

• Nasdaq futures (NQ=F): -0.83%, or -64.50 points

• 10-year Treasury yield (^TNX): +3.2 bps to 1.716%

• Crude oil (CL=F): +1.20% to $53.17 per barrel

It has been a tumultuous week for the markets, as the trade war, and now currency war, rages on between the U.S. and China. The People’s Bank of China (PBOC) set the yuan’s daily fixing at 7.0136 per U.S. dollar on Friday. This move was the second time this week that the official reference rate was weaker than 7, and the rate was the weakest since April 3, 2008. Nevertheless, Friday’s yuan rate was still stronger than what analysts were expecting.

The yuan has been on market watchers’ radars after the yuan weakened past the key psychological level of 7-per-dollar on Monday. That send markets into a frenzy, and stocks posted their worst day of 2019. It has been a choppy trading week since, as more uncertainty gets pumped into the market.

Meanwhile, crude oil is also in focus after the International Energy Agency (IEA) reported on Friday that demand growth is at its lowest level in over a decade. The agency noted that global oil demand growth in the first half of this year was the slowest since the financial crisis. With China being the only major source of growth, the IEA lowered its global demand forecast to 1.1 million barrels per day for 2019 and 1.3 million barrels per day for 2020.

Huawei is grabbing the attention of investors after announcing that it has launched its own operating system called HongmengOS, or HarmonyOS in English. CEO of Huawei’s consumer division, Richard Yu, made the announcement at the Huawei Developer Conference. This new operating system allows Huawei to be less reliant on Google’s (GOOGL) Android. Google’s parent company, Alphabet, stock was lower by 1.3% in pre-market trade.

Investors are also keeping an eye on ride-sharing companies Uber (UBER) and Lyft (LYFT). Uber’s weaker-than-expected second quarter earnings sent the stock tumbling more than 7% in pre-market trade. Adjusted sales were worse than what analysts were expecting, and Uber reported a shocking $5.24 billion net loss in the second quarter. That was Uber’s largest quarterly net loss ever. Uber’s report comes on the heels of Lyft’s much better-than-expected results. Gross bookings in the second quarter also fell short of expectations at $15.76 billion. Analysts expected $15.83 billion in gross bookings. Uber posted an adjusted EBITDA loss of $656 million, which was a 25% decline from last quarter.

“Our platform strategy continues to deliver strong results, with Trips up 35% and Gross Bookings up 37% in constant currency, compared to the second quarter of last year,” CEO Dara Khosrowshahi said in a statement. “In July, the Uber platform reached over 100 million Monthly Active Platform Consumers for the first time, as we become a more and more integral part of everyday life in cities around the world.”

Uber expects between $65 billion to $67 billion in gross bookings this year and expects adjusted EBITDA losses between $3.2 billion to $3 billion. The company did not give an adjusted net revenue forecast. Khosrowshahi also noted that Uber would be upping its marketing spend despite having cut 400 market employees recently. The question among investors remains whether or not Uber can continue its growth while attempting to simultaneously achieve profitability.

—

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

More from Heidi:

• Kraft Heinz earnings plunge, CEO says results not acceptable

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• Subway to test Beyond Meat in its sandwiches

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https://finance.yahoo.com/news/stock-market-news-august-9-2019-120212276.html

2019-08-09 12:02:00Z
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Oil Price Fundamental Daily Forecast – IEA Cuts Oil Demand Growth - FX Empire

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher on Friday shortly before the regular session opening after clawing back earlier losses. Helping to keep a lid on prices are concerns that the trade dispute between the United States and China will lead to a global economic slowdown and lower demand. However, the market is also being underpinned by expectations of more OPEC production cuts.

At 09:03 GMT, September WTI crude oil is at $52.82, up $0.28 or +0.51% and October Brent crude oil is at $57.81, up $0.43 or +0.84%.

U.S.-China Relations Worsen

There is not much optimism over the U.S. and China reaching a trade deal anytime soon. Conditions could even worsen as both try to force the other side into making an unfavorable deal. President Trump raised tensions a week ago when he announced new tariffs on China. Then the world’s second largest economy retaliated by letting its currency drift below the psychologically important 7 yuan to the dollar level, and cancelling all U.S. agricultural deals.

Crude will have very little chance of sustaining a rally if the U.S. and China continue to try to weaken each other’s stance.

IEA Cuts Demand Growth Forecast

Earlier today, the International Energy Agency (IEA) cut its global oil demand growth forecasts for this year, citing fears of an economic downturn. The energy agency now expects oil demand growth to reach 1.1 million barrels per day (b/d) in 2019 and 1.3 million b/d in 2020. That constitutes a downward revision of 100,000 b/d for this year and 50,000 b/d for next year.

In its closely-watched monthly oil report, the IEA said there was “growing evidence of an economic slowdown” with many large economies reporting weak gross domestic product (GDP) growth in the first half of the year.

“The situation is becoming even more uncertain,” the IEA said, before describing global demand growth in the first half of the year as “very sluggish.”

“Meanwhile, the prospects for a political agreement between China and the United States on trade have worsened. This could lead to reduced trade activity and less oil demand growth.”

Looking ahead, the IEA said the outlook for oil demand growth is “fragile,” with a greater likelihood of a downward revision than an upward one.

Daily Forecast

Friday’s marginal gains and recovery from early session weakness is not enough to get excited about a rally. It’s just price action led by short-covering and position-squaring. The hedge funds are short and likely looking to add to positions in the wake of today’s bearish IEA report.

There is a wildcard out there. It’s China’s interest in U.S. oil. Recently showed Chinese buyers rekindled their interest in U.S. crude, as imports climbed to a nine-month high of 247,000 barrels per day, according to the Energy Information Administration (EIA). This, however, may have been a goodwill gesture tied to the on-going trade negotiations. Because of the increasing tensions between the two countries, China may decide to dramatically reduce its intake of U.S. crude imports. This could trigger another steep break in prices.

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https://www.fxempire.com/forecasts/article/oil-price-fundamental-daily-forecast-iea-cuts-oil-demand-growth-592178

2019-08-09 09:52:29Z
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How Can a Company Lose $5.2 Billion on $3.2 Billion in Revenue? Uber Shows How - WOLF STREET

And rideshare revenue is stagnating.

Uber’s losses have been legendary for years, ever since they were being leaked to the public while it was still a privately held company. But this takes the cake. Uber reported this evening that it had lost $5.24 billion in the quarter through June 30. The thing is, Uber reported revenues of only $3.2 billion. In other words, its net loss exceeded revenue by $2 billion. That takes some doing.

Its $5.24 billion loss came on top of its $878 million loss in the first quarter. Combined, during the first half of 2019, Uber lost $6.25 billion. Total revenue for the two quarters was $6.3 billion. The chart of Uber’s “Loss from operations” – which does not include interest expense ($368 million in the first half) and “other income (expense),” such as last year’s gain from the sale of its stakes in Grab and Yandex – shows the annual totals from 2014 through 2018 and first-half total for 2019:

Lyft, Uber’s biggest competitor in the US, reported yesterday that its Q2 revenues of $867 million had generated a loss of $644 million. And that over the first half, its revenues of $1.64 billion generated a loss of $1.78 billion.

You see, this phenomenon of well-established global companies with thousands of employees generating as much or more in losses than they have in revenues causes my old-school thinking to short-circuit.

Uber has been around for a decade, and it has already burned through many billions of dollars in investor money to get where it is today, and there is still no functioning business model in sight.

So how did Uber lose $5.2 billion on $3.2 billion in revenues?

Naturally, the company does not want you to look at its business this way. So, its report clearly points out what to look at and how to look at it, and what to purposefully ignore. It says so right at the top of its press release:

“Our platform strategy continues to deliver strong results, with Trips up 35% and Gross Bookings [not including what drivers get paid] up 37% in constant currency, compared to the second quarter of last year,”

OK, despite all this hoopla and red-hot growth of these metrics, actual revenues increased only 14%.

“In July, the Uber platform reached over 100 million Monthly Active Platform Consumers for the first time, as we become a more and more integral part of everyday life in cities around the world.”

Sure, but who pays for it? The check is split two ways: Users pay part of it and investors pay the other part, digging deeply into their pockets to subsidize every ride.

And another thing: 14% topline growth is not a high-growth company. And that 14% was way down from prior growth rates. For example, in Q2 2018, revenues increased by 52%.

By region: In Latin America, revenues plunged 24%, in the US and Canada, where most of its business is, revenues increased by 19%, in the EU, the Middle East, and Africa, revenues increased by 22%, and in Asia by 13%.

Rideshare revenue stagnation.

What’s worse, revenue growth in its core business – its ride-hailing service – edged up only 2% to $2.3 billion. The technical term for this is stagnation.

To escape this ride-hailing stagnation, Uber got into an e-bike service (Jump), Uber Freight, and the latest red-hot fad, food delivery. Revenues of “Other Bets” rose 175% to $195 million. And revenues at Uber Eats jumped 72% to $595 million. All of this stuff is losing money hand-over-fist.

That $5.24 billion in losses includes the $300 million cost of its “driver appreciation award” – those dang drivers again – related to its IPO. And it included the $3.9 billion in costs of its stock-based compensation plans related to the IPO.

In terms of cash burn from operations – “net cash used in operating activities” – the company reported that it burned $1.64 billion in the first half.

But Uber is not going to run out of money any time soon. It has already extracted so much from investors, including during the IPO, that it is still swimming in nearly $12 billion in cash, cash equivalents, and restricted cash. Even Uber will need some time to burn it all.

No one apparently – least of all the executives at Uber – have any idea how to get to profitability, or at least get to a self-sustaining business model. The hope was for years that Uber would replace those peskily expensive drivers with driverless cars.

The autonomous cars would be capital intensive, sure, but capital is cheap or free (as the funds raised during the IPO), and even underpaid humans are too costly for Uber. And since there are no drivers, there are no problems with drivers. This plan looked great – until one of Uber’s self-driving prototypes (with a human onboard) killed a pedestrian.

Instead of showing a clear and short path to profitability, CEO Dara Khosrowshahi dazzled us with vagueness during the conference call: Ride-hailing, he said, “should turn out to be a spectacular business long term.”

The business is already spectacular, in terms of its losses.

And “long-term” includes the hopes — that have been pushed out further and further — that autonomous vehicles will finally make it far enough to where they can replace those expensive human drivers, at a reasonable cost and without mowing down too many pedestrians. Meanwhile, losses pile up. And rideshare revenues stagnate.

The rideshare industry is a peculiar creature: It just about destroyed the taxi business – which was ripe for a big shakeup – because it is able to dodge taxi regulations and burn huge amounts of money, while taxi companies have to stick to taxi regulations and make money or go out of business – because taxi-company investors are not willing to fund losses.

But rideshare investors have been bedazzled by the promise of who knows what all, and are eager to fund these losses year after year without end in sight.

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2019-08-09 03:35:28Z
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Powell Speaks, Trump Tweets, China Reacts, Markets Freak. Repeat - Bloomberg

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1. Powell Speaks, Trump Tweets, China Reacts, Markets Freak. Repeat  Bloomberg
2. Trump calls for the Fed to cut rates 'bigger and faster' and says China is not the problem  CNBC
3. Trump slams the Fed amid market volatility  Fox Business
4. Opinion: President Trump weakens China’s currency, cries foul  Los Angeles Times
5. The Fed’s Job Is to Protect the Economy, Even From Trump  Bloomberg
6. View full coverage on Google News

https://www.bloomberg.com/news/articles/2019-08-08/powell-speaks-trump-tweets-china-reacts-markets-freak-repeat

2019-08-08 09:00:00Z
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Leslie Wexner: Jeffrey Epstein cheated at least $46 million from me - Business Insider

Astrid Stawiarz/Stringer and Patrick McMullan/Getty Images

• Victoria's Secret billionaire Leslie Wexner said convicted sex offender Jeffrey Epstein "misappropriated vast sums of money" from his fortune while Epstein was his financial advisor.
• Wexner was one of Epstein's only known clients, and observers say that Epstein's decades-long relationship to the high-powered billionaire contributed to his success. 
• While the two had previously been described as "close personal friends," Wexner last month said he "regretted" ever crossing paths with Epstein and said he "completely severed" all ties with Epstein 12 years ago.
• Epstein was arrested last month and charged with sex trafficking and conspiracy to commit sex trafficking. He has pleaded not guilty. If convicted, he faces up to 45 years in prison.

Victoria's Secret billionaire Leslie Wexner said convicted sex offender Jeffrey Epstein "misappropriated vast sums of money" from his fortune while Epstein was his financial advisor.

In a letter to members of his namesake Wexner Foundation, seen by the Wall Street Journal, the CEO and founder of L Brands, the parent company to Victoria's Secret, claimed that Epstein "had misappropriated vast sums of money from me and my family."

"This was, frankly, a tremendous shock, even though it clearly pales in comparison to the unthinkable allegations against him now," Wexner continued in the letter.

According to CNBC, Wexner's letter did not specify how much money was recovered from Epstein's financial mismanagement. Though according to The Journal, tax records indicate that Epstein made a $46 million contribution to a Wexner charitable fund in January 2008. In his letter, Wexner alleged in his letter that this amount represented only a "portion" of the total sum mishandled by Epstein.

He added that "every dollar" of that money originally belonged to the Wexner family. A representative for Wexner did not comment to The Journal on whether the "misappropriation" was reported to authorities.

Business Insider could not immediately reach an attorney for Epstein for comment.

According to the New York Times, Wexner gave Epstein power of attorney in 1991, handing the disgraced financier almost complete control of his financial affairs for more than a decade. The power allowed Epstein to hire people, sign checks, buy and sell properties, and even borrow money on Wexner's behalf. 

Wexner was also one of Epstein's only known clients, and observers say that Epstein's decades-long relationship to the high-powered billionaire contributed to his success. Epstein is said to have received millions of dollars from Wexner, and reportedly owned mansions and private planes previously owned by Wexner or his companies. 

Read more: Victoria's Secret billionaire Leslie Wexner gave near-total control of his finances to Jeffrey Epstein, according to a stunning new account of their controversial friendship 

While the two were described as "close personal friends" in a 2002 lawsuit, the relationship between them soured after charges of sexual misconduct against Epstein surfaced. Wexner last month wrote in a company memo that he "regretted" ever crossing paths with Epstein and said he "completely severed" all ties with Epstein 12 years ago.

Epstein pleaded guilty to state charges of soliciting prostitution in June 2008 and registered as a sex offender as part of a deal cut with the US Attorney's Office in Miami. He was sentenced to 18 months in prison but only served 13 months in a private wing of the Palm Beach County Jail where he was allowed to work in an office six days per week.

Epstein was arrested last month and charged with sex trafficking and conspiracy to commit sex trafficking. He has pleaded not guilty. If convicted, he faces up to 45 years in prison.

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2019-08-08 07:50:37Z
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The global trade war has morphed into a currency war — and markets are tanking - INSIDER

• The trade war has increasingly become focused on currencies, with the recent spat with China over the yuan in the spotlight.
• The Chinese currency's fluctuation spelled disaster for global equities. Then, when China fixed the yuan higher than where experts expected, markets rebounded.
• The volatility will likely continue if currency remains in the forefront of the global dispute, but could do long term damage on the global economy.
• Read more on Markets Insider.

---

President Donald Trump's trade war has increasingly revolved around the role of global currencies.

It's a shift he's ushered along by crying foul on alleged currency manipulation. And there have even been reports that he's considered doing it with the US dollar.

Now, amid an ongoing spat with China, the currency war is again front-and-center as the global trade dispute rages. It ultimately amounts to a race to the bottom as countries try to push the value of their currencies lower than competitors in order to gain an advantage in trade. This is also why Trump has said he wants a weaker US dollar.

This runs counter to how countries are supposed to work together in order to achieve a balanced economy. When cooperation breaks down, global markets feel the negative effects. That's exactly what's played out around the world over a series of months — and experts are getting increasingly worried that there's no end in sight.

"The market is going to be very volatile," Dan Ikenson, director of the Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute told Markets Insider. "A trade war that was supposed to be easy to win seems like it's going to be hanging around for a long time."

The immediate damage a currency war can inflict has been clear in recent days. US equities slid to their worst performance of 2019 Monday — erasing billions of dollars in wealth— when China let the yuan fall below a key psychological threshold. The plunge also marked the currency's lowest level since 2008.

Meanwhile, the Cboe Volatility Index — or VIX, commonly known as the stock market's fear gauge — jumped 32% in a single day. The weakness also extended into major European and Asian indexes. Sharp fluctuations also struck the bond market as 10-year Treasury yields plummeted, pushing the yield curve — a closely watched recession indicator — to its most inverted level since 2007.

Then, on Tuesday, markets stabilized when the People's Bank of China set the daily yuan rate higher than expected and said it did not manipulate the currency after a formal accusation from the US Treasury Department.

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The two-day takeaway is clear: currency shenanigans are going to negatively impact market sentiment. And considering the matter is largely unresolved, it's likely that there will be much more volatility in the currency market that finds its way into other asset classes. Many — including Trump— now think the ordeal could last until 2020.

"The markets now are going to be hanging on everything that's stated on trade negotiations," so there will be fluctuations depending on signs of progress, Dom Catrambone, CEO of Whitford Asset Management told Markets Insider. "Now I think people need to be watching their portfolios."

Further, China isn't the only global power Trump has fought. The President also accused his European counterparts of manipulating their currency when the European Central Bank suggested in June it may lower interest rates and purchase another round of assets to offset a slowing economy.

Trump did cool European tensions slightly when he made a deal to increase US beef exports to the EU — a move also designed to support American farmers that are hurt by the China tariffs. But even when announcing the agreement, he spooked European officials when he made a joke about levying tariffs on cars from Europe.

While currency devaluation seems to be the latest bargaining chip in the global trade dispute, the long term impacts of weaker currencies in the US and abroad could be "really bad," Catrambone said.

After all, a strong currency tends to be good for both consumers and consumption. And Ikenson thinks prolonged weakness in the greenback could usher in the next big economic collapse.

"A weaker currency could be inflationary and recessionary" over time, he said.

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https://www.insider.com/weaker-currency-could-have-a-negative-impact-on-markets-2019-8

2019-08-07 14:15:00Z
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