Data

An earth mover prepares the foundation of new apartment block development in the waterfront suburb of Rushcutters Bay
An earth mover prepares the foundation of new apartment block development in the waterfront suburb of Rushcutters Bay, Australia, December 13, 2016. REUTERS/Jason Reed

May 26, 2019

By Swati Pandey

SYDNEY (Reuters) – Australia’s crumbling housing market looks set to stabilize over coming months as hopes of interest rate cuts and loosening of mortgage rules have boosted buyer inquiries, property and mortgage brokers say.

Home prices across Australia have fallen rapidly since late-2017, heightening worries among policymakers that a prolonged decline would deal a severe blow to the country’s already slowing economy.

While industry watchers say a return to boom times is unlikely anytime soon, they point to signs suggesting a bottoming-out for the sector is imminent.

Economists, including those at AMP and Citibank, last week re-jigged their forecasts to pencil in a less steeper decline in home prices than previously predicted. Several property and mortgage brokers who spoke to Reuters on Friday also said they have seen a noticeable jump in customer inquiries, including from those buying a home for investment.

“The sun is shining all over again now,” said mortgage broker Tony Bice at Sydney-based Finance Made Easy.

Bice cited the unexpected re-election of the country’s pro-business coalition government a little over a week ago and predictions of an Australia rate cut as soon as next month for the improvement in sentiment.

The Australian Prudential Regulation Authority’s (APRA) proposal to ease stress test on mortgages was the “most interesting” policy change, Bice said. Analysts expect the regulator’s move would boost customers’ borrowing capacity.

“My inquiries since the last week has risen dramatically. I have written 11 loans in the last 4 days. In the past, you’d be lucky to write 11 loans in two weeks.” Bice told Reuters.

“A lot of my clients are holding off until June to see what the Reserve Bank does. If they drop the cash rate, I expect banks to follow suit. That will finally revive the market.”

With growth sputtering and inflation at a low ebb, Philip Lowe, the governor of the Reserve Bank of Australia (RBA) last week gave the strongest signal yet that rates were about to move lower soon. And an overwhelming majority of economists are now predicting a cut in the cash rate to 1.25% from a record-low of 1.5% at the RBA’s June 4 policy meeting.

UNDER THE HAMMER

Auction activity – a closely-watched measure of demand in Australia – over the weekend provided the first major test for the market following the policy changes.

There were 1,933 capital city auctions on Saturday, double the amount from the previous week, and preliminary data showed a modest pick-up in demand. Clearance rates nudged above 60% for the two biggest cities of Sydney and Melbourne, compared to 50%-57% over the past year.

The promise of lower rates and easy credit led economists to predict a less steeper drop in home prices. Citi now sees a peak-to-trough fall of 7.5% by June 2019 from 10% previously. AMP’s Shane Oliver predicts a 12% top-to-bottom decline, from an earlier forecast of 15%.

Yet, few expect the boom days to return in a hurry.

“We see broadly flat house prices for 2020,” Oliver said.

“Given still high house prices and poor affordability, still very high debt levels, tighter lending standards and rising unemployment a quick return to boom time conditions is most unlikely.”

(Reporting by Swati Pandey; Editing by Shri Navaratnam)

Source: OANN

An earth mover prepares the foundation of new apartment block development in the waterfront suburb of Rushcutters Bay
An earth mover prepares the foundation of new apartment block development in the waterfront suburb of Rushcutters Bay, Australia, December 13, 2016. REUTERS/Jason Reed

May 26, 2019

By Swati Pandey

SYDNEY (Reuters) – Australia’s crumbling housing market looks set to stabilize over coming months as hopes of interest rate cuts and loosening of mortgage rules have boosted buyer inquiries, property and mortgage brokers say.

Home prices across Australia have fallen rapidly since late-2017, heightening worries among policymakers that a prolonged decline would deal a severe blow to the country’s already slowing economy.

While industry watchers say a return to boom times is unlikely anytime soon, they point to signs suggesting a bottoming-out for the sector is imminent.

Economists, including those at AMP and Citibank, last week re-jigged their forecasts to pencil in a less steeper decline in home prices than previously predicted. Several property and mortgage brokers who spoke to Reuters on Friday also said they have seen a noticeable jump in customer inquiries, including from those buying a home for investment.

“The sun is shining all over again now,” said mortgage broker Tony Bice at Sydney-based Finance Made Easy.

Bice cited the unexpected re-election of the country’s pro-business coalition government a little over a week ago and predictions of an Australia rate cut as soon as next month for the improvement in sentiment.

The Australian Prudential Regulation Authority’s (APRA) proposal to ease stress test on mortgages was the “most interesting” policy change, Bice said. Analysts expect the regulator’s move would boost customers’ borrowing capacity.

“My inquiries since the last week has risen dramatically. I have written 11 loans in the last 4 days. In the past, you’d be lucky to write 11 loans in two weeks.” Bice told Reuters.

“A lot of my clients are holding off until June to see what the Reserve Bank does. If they drop the cash rate, I expect banks to follow suit. That will finally revive the market.”

With growth sputtering and inflation at a low ebb, Philip Lowe, the governor of the Reserve Bank of Australia (RBA) last week gave the strongest signal yet that rates were about to move lower soon. And an overwhelming majority of economists are now predicting a cut in the cash rate to 1.25% from a record-low of 1.5% at the RBA’s June 4 policy meeting.

UNDER THE HAMMER

Auction activity – a closely-watched measure of demand in Australia – over the weekend provided the first major test for the market following the policy changes.

There were 1,933 capital city auctions on Saturday, double the amount from the previous week, and preliminary data showed a modest pick-up in demand. Clearance rates nudged above 60% for the two biggest cities of Sydney and Melbourne, compared to 50%-57% over the past year.

The promise of lower rates and easy credit led economists to predict a less steeper drop in home prices. Citi now sees a peak-to-trough fall of 7.5% by June 2019 from 10% previously. AMP’s Shane Oliver predicts a 12% top-to-bottom decline, from an earlier forecast of 15%.

Yet, few expect the boom days to return in a hurry.

“We see broadly flat house prices for 2020,” Oliver said.

“Given still high house prices and poor affordability, still very high debt levels, tighter lending standards and rising unemployment a quick return to boom time conditions is most unlikely.”

(Reporting by Swati Pandey; Editing by Shri Navaratnam)

Source: OANN

A man casts his vote during European Parliament election in Riga
A man casts his vote during European Parliament election in Riga, Latvia, May 25, 2019. REUTERS/Ints Kalnins

May 25, 2019

By Alastair Macdonald

BRUSSELS (Reuters) – Europeans vote on Sunday in an election expected to further dent traditional pro-EU parties and bolster the nationalist fringe in the European Parliament, putting a potential brake on collective action in economic and foreign policy.

Right-wing populists top opinion polls in two of the big four member states – Italy and supposedly exiting Britain – and could also win in a third, France, rattling a pro-Union campaign championed by centrist President Emmanuel Macron.

However, exit polls in some countries that have already voted have given pro-EU parties some comfort. The Dutch Labour party, all but written off, looks to have finished first, helped by the visibility of having the EU socialists’ lead candidate, current EU deputy chief executive Frans Timmermans.

In the Netherlands, pro-Union parties scored 70%, up three points on the last European Parliament vote in 2014, and left the upstart anti-immigration party of Thierry Baudet fourth on 11%.

The Dutch also turned out in bigger numbers, albeit at just 41%, reinforcing hopes in Brussels of reversing a 40-year trend of declining turnout that critics cite as a “democratic deficit” that undermines the legitimacy of European Union lawmaking.

An exit poll after Friday’s vote in deeply pro-EU Ireland pointed to an expected “Green Wave”. Across the bloc, concerns about climate change and the environment may bolster the pro-EU Greens group and could mean tighter regulations for industry and for the terms the EU may set for partners seeking trade accords.

Britain also voted on Thursday and a new party focused on getting out of the EU was forecast by pre-vote opinion polls to come top, but there has been no exit poll data. Attention there has focused on the resignation of Prime Minister Theresa May. Results will be out late on Sunday, when all countries have voted.

WAY AHEAD UNCLEAR

The challenges facing the European project include unprecedented transatlantic slights from a U.S. president who fetes Europe’s populists, border rows among its own members over migrants and an economy hobbled by public debt and challenged by the rise of China.

But parties seeking collective action on shared issues such as trade, security, migration or climate change should still dominate, albeit with a smaller overall majority.

Europeans are preparing to remember events that shaped the Union. It is 75 years since Americans landed in France to defeat Nazi Germany and since Russian forces let the Germans crush a Polish bid for freedom, and 30 since Germans smashed the Berlin Wall to reunite east and west Europe. But memories of wars, hot and cold, have not sufficed to build faith in a united future.

Mainstream parties pushing closer integration of the euro currency zone’s economy are struggling to capture the imagination of a public jaded by political elites.

Matteo Salvini’s League in Italy may pip the Christian Democrats of German Chancellor Angela Merkel, the bloc’s power broker, to become the biggest single party in the 751-seat chamber.

Right-wing ruling parties in Poland and Hungary, defying Brussels over curbs to judicial and media independence, will also return eurosceptic lawmakers on Sunday.

The results should be clear by late on Sunday, with exit polls in Germany at 1600 GMT and France at 1800 GMT setting the tone before the final end of voting, in Italy at 2100 GMT, sees the Parliament publish its own seat forecast.

The result will usher in weeks of bargaining among parties to form a stable majority in the Parliament, and among national leaders to choose successors to European Commission President Jean-Claude Juncker and other top EU officials.

Many expect a clash as early as Tuesday, when leaders meeting in Brussels are likely to snub Parliament’s demands that one of the newly elected lawmakers should run the EU executive.

(EU election graphic: https://tmsnrt.rs/2HvZs1M)

(Reporting by Alastair MacDonald; Editing by Frances Kerry)

Source: OANN

President Donald Trump is reportedly ready to release an executive order to mandate the disclosure of healthcare prices in an industry that’s used to conducting its business in private, the Wall Street Journal reported Friday.

The order, which has the force of law, could come as early as next week, the Journal reported, citing unnamed sources.

According to the news outlet, the order could direct federal agencies to push the healthcare industry for transparency on cost data – and could use the Justice Department to bust up monopolies of hospitals and health-insurance plans for driving up the cost of care.

The White House has been working for months on a strategy to lower healthcare costs by giving consumers and employers data on the discounted and negotiated rates between insurers, hospitals, doctors and other providers, the Journal reported.

Internal administrative disputes over how aggressively to mandate price disclosure have delayed earlier plans for an executive order, the Journal reported.

The administration is also likely to use a coming hospital outpatient rule to require hospitals to disclose their negotiated rates with insurers – a move expected in the summer, the Journal reported.

 “In a grocery store, you can get a price check for a can of peas on Aisle 2,” said Sen. Ron Wyden, D-Ore., in introducing legislation that would make insurers tell consumers what their out-of-pocket costs would be for drugs or in-network procedures, the Journal reported.

“Health care is much more difficult, but it ought to be a lot easier for Americans to find out what they will have to pay before they get to a doctor.”

Source: NewsMax Politics

FILE PHOTO: People pass by the NYSE in the financial district of New York
FILE PHOTO: People pass by the New York Stock Exchange (NYSE) in the financial district in the lower Manhattan borough of New York City, U.S. June 2, 2016. REUTERS/Brendan McDermid/File Photo

May 24, 2019

NEW YORK (Reuters) – J.P. Morgan on Friday more halved its previous estimate on U.S. economic growth in second quarter to 1.00% following data that showed a fall in durable goods orders in April.

The bank now sees it as basically a coin toss for the Federal Reserve to raise or cut interest rates, compared with its previous call for just a rate increase.

“We had previously expected the next move from the Fed would be a hike, albeit at the very end of our forecast horizon in late 2020,” J.P. Morgan economist Michael Feroli wrote in a research note. “We now see the risks of the next move as about evenly distributed between a hike and a cut.”

(Reporting by Richard Leong; Editing by Bill Trott)

Source: OANN

FILE PHOTO: People pass by the NYSE in the financial district of New York
FILE PHOTO: People pass by the New York Stock Exchange (NYSE) in the financial district in the lower Manhattan borough of New York City, U.S. June 2, 2016. REUTERS/Brendan McDermid/File Photo

May 24, 2019

NEW YORK (Reuters) – J.P. Morgan on Friday more halved its previous estimate on U.S. economic growth in second quarter to 1.00% following data that showed a fall in durable goods orders in April.

The bank now sees it as basically a coin toss for the Federal Reserve to raise or cut interest rates, compared with its previous call for just a rate increase.

“We had previously expected the next move from the Fed would be a hike, albeit at the very end of our forecast horizon in late 2020,” J.P. Morgan economist Michael Feroli wrote in a research note. “We now see the risks of the next move as about evenly distributed between a hike and a cut.”

(Reporting by Richard Leong; Editing by Bill Trott)

Source: OANN

Traders work on the floor at the NYSE in New York
Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 23, 2019. REUTERS/Brendan McDermid

May 24, 2019

By Sinéad Carew

(Reuters) – The escalating U.S.-China trade war has sent dividend-rich sectors like utilities higher, but investors don’t need to get all defensive just yet, according to strategists who say there are plenty of growth stocks with some insulation from China.

Some investors are seeking safety in domestic U.S. growth stocks ranging from software and online advertising to aerospace and recruitment since President Donald Trump’s May 5 tweets showed that U.S. talks with China were in trouble.

While the prospect of a prolonged trade war has shaken the market, investors are also trying to protect themselves from the risk that they could miss out on gains in the event that the United States and China reach a surprise agreement.

Because of the difficulty handicapping the chance of a U.S.-China deal, John Praveen Portfolio Manager at QMA in Newark, New Jersey, said he would not “completely sell out” of stocks. But he said: “if I was 5% overweight stocks, I might reduce it to 3 pct and see if I could reduce exposure to semiconductors and technology.”

“If you’re looking to avoid the pure dividend play and avoid the China trade narrative, you have to look at stocks that are a pure play on the U.S. economy,” said Peter Kenny, founder, Kenny’s Commentary LLC in New York.

Broadly speaking, investors have been raising their defenses. While the S&P has fallen roughly 4% since Trump announced his plan to raise tariffs on Chinese goods in early May, utilities – a low-growth sector with reliably high dividends – has risen more than 2%.

But growth-hungry investors are seeking more nimble companies with little exposure to overseas sales or Chinese imports even in the beaten down technology sector, where semiconductor stocks have lead the recent declines.

Online advertising platforms and cloud software are two technology segments that would not be directly affected by China tariffs, according to Daniel Morgan, portfolio manager at Synovus Trust in Atlanta.

In online advertising, Morgan favors Twitter, Facebook and Snap Inc over Google parent Alphabet, which suspended business with China’s Huawei this week as a result of the trade battle.

He also likes software providers such as Salesforce.com, which derives 70% of its revenue from the Americas and only 10% from Asia-Pacific. However, Salesforce.com has fallen more than 5% since the Trump tweets.

Another option is Workday Inc, which has risen about 4% since May 5 and derives 75% of its revenue from the United States.

Steve Lipper, senior investment strategist at Royce & Associates favors U.S.-facing companies offering services such as recruiting and merger advice due to a strong U.S. labor market and solid merger activity.

But while U.S.-facing recruitment firms such as Kforce and ASGN Inc may not be hurt directly by the trade war, Robert W. Baird analyst Mark Marcon notes that they would suffer if tariffs caused the economy to weaken.

Instead, Marcon favors domestic payroll software companies such as Automatic Data Processing Inc and Paychex Inc, which tend to do better than recruiters in a downturn. But even if their fundamentals remain strong, payroll companies like Paycom and Paylocity could be vulnerable in a selloff due to relatively high valuations, Marcon said.

In industrials – a sector with heavy exposure to China – Burns McKinney, a portfolio manager at Allianz Global Investors in Dallas likes defense stocks such as Raytheon and Lockheed Martin, which could benefit if U.S.-Iran hostilities keep intensifying.

Since sectors like utilities have risen so much, Royce’s Lipper is favoring less obvious safe choices.

“Be wary when the consensus view is already reflected in valuations,” said Lipper, but he added: “The U.S. economy is so diverse that there are always areas that are insulated from whatever you have a concern about.”

(Reporting By Sinéad Carew; Editing by Alden Bentley and Nick Zieminski)

Source: OANN

Traders work on the floor at the NYSE in New York
Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 23, 2019. REUTERS/Brendan McDermid

May 24, 2019

By Sinéad Carew

(Reuters) – The escalating U.S.-China trade war has sent dividend-rich sectors like utilities higher, but investors don’t need to get all defensive just yet, according to strategists who say there are plenty of growth stocks with some insulation from China.

Some investors are seeking safety in domestic U.S. growth stocks ranging from software and online advertising to aerospace and recruitment since President Donald Trump’s May 5 tweets showed that U.S. talks with China were in trouble.

While the prospect of a prolonged trade war has shaken the market, investors are also trying to protect themselves from the risk that they could miss out on gains in the event that the United States and China reach a surprise agreement.

Because of the difficulty handicapping the chance of a U.S.-China deal, John Praveen Portfolio Manager at QMA in Newark, New Jersey, said he would not “completely sell out” of stocks. But he said: “if I was 5% overweight stocks, I might reduce it to 3 pct and see if I could reduce exposure to semiconductors and technology.”

“If you’re looking to avoid the pure dividend play and avoid the China trade narrative, you have to look at stocks that are a pure play on the U.S. economy,” said Peter Kenny, founder, Kenny’s Commentary LLC in New York.

Broadly speaking, investors have been raising their defenses. While the S&P has fallen roughly 4% since Trump announced his plan to raise tariffs on Chinese goods in early May, utilities – a low-growth sector with reliably high dividends – has risen more than 2%.

But growth-hungry investors are seeking more nimble companies with little exposure to overseas sales or Chinese imports even in the beaten down technology sector, where semiconductor stocks have lead the recent declines.

Online advertising platforms and cloud software are two technology segments that would not be directly affected by China tariffs, according to Daniel Morgan, portfolio manager at Synovus Trust in Atlanta.

In online advertising, Morgan favors Twitter, Facebook and Snap Inc over Google parent Alphabet, which suspended business with China’s Huawei this week as a result of the trade battle.

He also likes software providers such as Salesforce.com, which derives 70% of its revenue from the Americas and only 10% from Asia-Pacific. However, Salesforce.com has fallen more than 5% since the Trump tweets.

Another option is Workday Inc, which has risen about 4% since May 5 and derives 75% of its revenue from the United States.

Steve Lipper, senior investment strategist at Royce & Associates favors U.S.-facing companies offering services such as recruiting and merger advice due to a strong U.S. labor market and solid merger activity.

But while U.S.-facing recruitment firms such as Kforce and ASGN Inc may not be hurt directly by the trade war, Robert W. Baird analyst Mark Marcon notes that they would suffer if tariffs caused the economy to weaken.

Instead, Marcon favors domestic payroll software companies such as Automatic Data Processing Inc and Paychex Inc, which tend to do better than recruiters in a downturn. But even if their fundamentals remain strong, payroll companies like Paycom and Paylocity could be vulnerable in a selloff due to relatively high valuations, Marcon said.

In industrials – a sector with heavy exposure to China – Burns McKinney, a portfolio manager at Allianz Global Investors in Dallas likes defense stocks such as Raytheon and Lockheed Martin, which could benefit if U.S.-Iran hostilities keep intensifying.

Since sectors like utilities have risen so much, Royce’s Lipper is favoring less obvious safe choices.

“Be wary when the consensus view is already reflected in valuations,” said Lipper, but he added: “The U.S. economy is so diverse that there are always areas that are insulated from whatever you have a concern about.”

(Reporting By Sinéad Carew; Editing by Alden Bentley and Nick Zieminski)

Source: OANN

Mexico's President Andres Manuel Lopez Obrador attends a news conference, in Mexico City
Mexico’s President Andres Manuel Lopez Obrador attends a news conference, at the National Palace in Mexico City, Mexico, May 21, 2019. REUTERS/Henry Romero

May 24, 2019

MEXICO CITY (Reuters) – Mexico’s economy contracted in the first quarter of 2019 from the previous three-month period, data showed on Friday, dealing a blow to the new government’s drive to convince investors it can boost growth in Latin America’s second largest economy.

President Andres Manuel Lopez Obrador took office in December pledging to ramp up lackluster economic growth and to improve job creation.

The economy shrunk 0.2% compared with the October-December period, according to data from national statistics agency INEGI.

In annual terms, however, the economy expanded 1.2% compared with a year earlier, slightly lower than the 1.3% growth preliminary data published last month showed.

Lopez Obrador is targeting average annual economic growth of 4% during his six-year term.

But some of his economic decisions have rattled investors, and private sector analysts have cut their Mexican growth forecasts for this year.

The International Monetary Fund on April 9 lowered Mexico’s 2019 growth outlook to 1.6% from 2.1% and to 1.9% from 2.2%, citing shifts in perception about policy under the new administration.

(Reporting by Anthony Esposito; Editing by Chizu Nomiyama and Susan Thomas)

Source: OANN

FILE PHOTO: A car carrier trailer carries Tesla Model 3 electric sedans, is seen outside the Tesla factory in Fremont
FILE PHOTO: A car carrier trailer carries Tesla Model 3 electric sedans, is seen outside the Tesla factory in Fremont, California, U.S. June 22, 2018. REUTERS/Stephen Lam/File Photo

May 24, 2019

By Lucia Mutikani

WASHINGTON (Reuters) – New orders for U.S.-made capital goods fell more than expected in April, further evidence that manufacturing and the broader economy were slowing after a growth spurt in the first quarter that was driven by exports and a buildup of inventories.

The report from the Commerce Department on Friday also showed orders for these goods were not as strong as previously thought in March and shipments were weak over the last two months. Manufacturing is easing as businesses work off stockpiles of unsold goods, leading to fewer orders being placed with factories. Industrial production dropped in April and a measure of factory activity declined to a near 10-year low in May.

Activity is also being weighed down by an escalation in the trade war between the United States and China, which has sparked a sell-off on Wall Street, as well as tepid global growth. The renewed trade tensions are expected to weigh on exports, which earlier this year had benefited from increased Chinese purchases of American goods.

Non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.9% last month as demand softened almost across the board.

Data for March was revised down to show these so-called core capital goods orders rising 0.3% instead of increasing 1.0% as previously reported. Economists polled by Reuters had forecast core capital goods orders falling 0.3% in April. Core capital goods orders increased 2.6% on a year-on-year basis.

Shipments of core capital goods were unchanged last month after a downwardly revised 0.6% decline in the prior month. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement.

They were previously reported to have slipped 0.1% in March.

The downward revision to March shipments suggests business spending was even weaker than initially estimated in the first quarter and could result in GDP growth for the quarter being trimmed when the government publishes its revision next week.

The government estimated last month that the economy expanded at a 3.2% pace in the first quarter. Second-quarter GDP growth estimates are below a 2% annualized rate.

The dollar slipped against a basket on currencies following Friday’s data. U.S. Treasury prices were little changed.

INVENTORIES RISE

In April, orders for machinery edged up 0.1% after dropping 2.0% in March. Orders for computers and electronic products fell 0.4%. There were also decreases in orders for primary metals. Orders for electrical equipment, appliances and components gained 0.9%.

Overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, tumbled 2.1% in April after increasing 1.7% in the prior month. Orders for transportation equipment dropped 5.9% after rising 5.9% in March.

Orders for motor vehicles and parts decreased 3.4% last month, the most since May 2018. Orders for non-defense aircraft plunged 25.1% after rising 7.8% in March. Boeing reported on its website that it had only four aircraft orders in April, down from 44 in March.

All of the orders last month were for the troubled 737 MAX aircraft. Boeing’s fastest-selling MAX 737 jetliner was grounded in March after two fatal plane crashes in five months.

Boeing has cut back production and suspended deliveries of the aircraft, which is also contributing to the weakness in manufacturing.

Overall durable goods shipments fell 1.6% in April, the most since December 2015. There was a 3.4% drop in shipments of motor vehicles and parts. Shipments of civilian aircraft tumbled 16.0% last month.

Durable goods inventories rose 0.4% last month, with motor vehicle stocks rising 0.8%. Civilian aircraft inventories increased 1.3% last month.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Source: OANN


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