Aurelia Butler

“I estimate that a rise in rates from where they are to about 4.5 percent will produce about a 20 percent negative impact on equity prices,” Bridgewater Associates’ founder Dalio wrote in a LinkedIn post on Tuesday.His comments came the day data showed U.S. consumer prices unexpectedly rose in August. The inflation data raised fears of another outsized interest rate hike next week and sent stock markets into a downward spiral.”…interest rates will go up … other markets will go down … the economy will be weaker than expected,” Dalio wrote.”This will bring private sector credit growth down, which will bring private sector spending and, hence, the economy down with it.”Dalio’s bearish view further ignites concerns about valuations in U.S. stocks.While the S&P 500 index’s forward price-to-earnings multiple is far below what it commanded at the start of the year, investors believe stock valuations may have to fall further to reflect the risks of rising bond yields and a looming recession.Rising mortgage rates are already weighing on the housing sector as the average interest rate on the most popular U.S. home loan rose above 6% for the first time since 2008.A significant economic contraction will be required, but it will take a while to happen because cash levels and wealth levels are now relatively high, Dalio wrote.”We are now seeing that happen. For example, while we are seeing a significant weakening in the interest rate and debt dependent sectors like housing, we are still seeing relatively strong consumption spending and employment.” More

LAGOS (Reuters) – Inflation in Nigeria rose for a seventh straight month to 20.52% in August, the statistics bureau said on Thursday ahead of a central bank rate decision next week.The central bank meets on Tuesday to decide on rates in Africa’s largest economy. It has previously said it would continue with rate hikes if inflation remained elevated.Refinitiv data showed that year-on-year inflation in Nigeria remained at its highest level since September 2005. On a monthly basis, the consumer price index rose 1.77% in August, compared to 1.82% in July, the National Bureau of Statistics said. Food inflation quickened to 23.12% from 22.02% the previous month as Nigerians continued to face higher prices for staples like rice and bread.The price of diesel has soared this year due to high global oil prices, which has led to higher electricity costs for citizens, while a weakening naira currency on the parallel market has made some imports expensive.Inflation has been in double digits in Nigeria since 2016, driven partly by the weakening naira.”In Nigeria, inflation is fueled by several factors but the paramount factors are exchange rate pressure and price of diesel,” the Financial Derivatives Company said in a note to investors.Nigerians head to the polls in February to choose President Muhammadu Buhari’s successor, with rising inflation and the state of the economy seen as major issues for voters.Policy-makers in Nigeria maintain that persistent inflationary pressures are structural and largely imported. More

Import prices dropped 1.0% last month after declining 1.5% in July, the Labor Department said on Thursday. In the 12 months through August, import prices increased 7.8% after climbing 8.7% in July. Economists polled by Reuters had forecast import prices, which exclude tariffs, falling 1.2% month-on-month.Coming on the heels of data on Wednesday showing a second monthly drop in producer prices in August, weak import prices should further assuage fears of inflation becoming entrenched.The government earlier this week reported an unexpected increase in consumer prices in August, which cemented expectations for a third 75 basis points interest rate hike from the Federal Reserve next Wednesday.The drop in import prices also suggests an easing of bottlenecks in the global supply chain.Imported fuel prices fell 6.8% last month after decreasing 7.5% in July. Petroleum prices declined 7.1%, while the cost of imported food dropped 1.6%.Excluding fuel and food, import prices dipped 0.1%. These so-called core import prices fell 0.5% in July. They increased 3.8% on a year-on-year basis in August. Dollar strength is helping to limit the increase in core import prices.The dollar has gained 7.5% against the currencies of the United States’ main trade partners since January.The report also showed export prices dropped 1.6% in August after decreasing 3.7% in July. Prices for agricultural exports fell 0.4% as lower prices for corn, fruit, meat and wheat offset higher prices for soybeans and vegetables. Nonagricultural export prices decreased 1.8%. Export prices increased 10.8% year-on-year in August after advancing 12.9% in July. More

Retail sales increased 0.3% last month, the Commerce Department said on Thursday. Data for July was revised down to show retail sales falling 0.4% instead of being unchanged as previously reported.Economists polled by Reuters had forecast sales would be unchanged, with estimates ranging from as low as a 0.5% decline to as high as a 0.5% increase. The report was another sign that the economy could tolerate higher interest rates as the Fed tightens monetary policy to fight stubbornly high inflation. Retail sales are being supported by a tight labor market, which is generating strong wage growth.The report followed news on Tuesday of a surprise increase in monthly consumer prices in August, which cemented expectations for a third 75-basis-point rate hike by the U.S. central bank next Wednesday.The national average gasoline price dropped to about $3.82 per gallon in late August after hitting an all-time high just above $5.00 in mid-June, according to data from AAA. Prices at the pump were averaging $3.698 per gallon on Thursday.Excluding automobiles, gasoline, building materials and food services, retail sales were unchanged last month. Data for July was revised lower to show these so-called core retail sales increasing 0.4% instead of 0.8% as previously reported.Core retail sales correspond most closely with the consumer spending component of gross domestic product. A steady pace of consumer spending and strong export growth helped to limit the drag on the economy from a moderation in the pace of inventory accumulation in the second quarter.Gross domestic product contracted at a 0.6% annualized rate last quarter after declining at a 1.6% pace in the January-March quarter. The economy is not in recession, with the income side of the growth ledger showing a 1.4% rate of expansion in the second quarter, thanks to labor market resilience.A separate report from the Labor Department on Thursday showed initial claims for state unemployment benefits fell 5,000 to a seasonally adjusted 213,000 for the week ended Sept. 10.Despite the hand wringing about a possible recession next year due to higher borrowing costs, there has not been a surge in layoffs. Economists say companies are hoarding workers after experiencing difficulties hiring in the past year as the COVID-19 pandemic forced some people out of the workforce in part because of prolonged illness caused by the virus.There were 11.2 million job openings at the end of July, with two jobs for every unemployed person. More

(Reuters) – Wall Street’s main indexes were set for a mixed open on Thursday as a slew of economic data pointed to resilience in the U.S. economy, likely keeping the Federal Reserve on track for aggressive interest rate hikes to tame inflation.U.S. retail sales unexpectedly rose 0.3% in August as lower gasoline prices supported spending, data showed, in a sign that the economy could tolerate higher interest rates as the Fed tightens monetary policy.A separate report from the Labor Department showed initial claims for state unemployment benefits fell 5,000 to a seasonally adjusted 213,000 for the week ended Sept. 10, signaling labor market resilience.”The economic conditions are quite good in the U.S. and it’s pretty compatible with the path of the 75-basis-point hike for the next meeting,” said Mabrouk Chetouane, head of global market strategy at Natixis Investment Managers Solutions.”If investors are still underestimating the Fed’s determination to fight against inflation, one of the key concerns is that we’ll see volatility increase in the coming weeks.”The CBOE Volatility index, also know as Wall Street’s fear gauge, edged up to 26.19 points, above its long-term average of 20.The main stock indexes closed slightly higher on Wednesday after wavering throughout the session as an on-target inflation print provided relief after Tuesday’s hotter-than-expected consumer prices data sparked the biggest percentage decline on Wall Street since June 2020.Investors fear steep rate hikes by the Fed will drive the economy into a recession, with many market observers concerned over the lagging effects of the central bank’s tightening phase.Money markets are pricing in a 74% chance of a 75-basis-point hike, while placing 27% odds of a 100-bps hike next week.The yield on two-year Treasury notes, a bellwether for interest rate expectations, touched new 14 year highs at 3.85%. [US/]Shares of rate-sensitive growth and technology stocks slipped alongside a rise in bond yields.Apple Inc (NASDAQ:AAPL), Meta Platforms and Tesla (NASDAQ:TSLA) Inc were down 0.2% in premarket trading. Netflix Inc (NASDAQ:NFLX), however, gained 2.7% as Evercore ISI upgraded the stock to “outperform”.At 08:53 a.m. ET, Dow e-minis were up 55 points, or 0.18%, S&P 500 e-minis were down 1.75 points, or 0.1%, and Nasdaq 100 e-minis were down 21.25 points, or 0.17%. Union Pacific (NYSE:UNP) and CSX Corp (NASDAQ:CSX) jumped nearly 3% each after U.S. railroad operators and unions secured a tentative deal to avert a rail shutdown that could have hit food and fuel supplies across the United States.Adobe (NASDAQ:ADBE) Inc slumped 10.2% after the photoshop maker said it would buy Figma in a cash-and-stock deal that valued the online design startup at about $20 billion. More

The Ministry’s Secretariat for Economic Policy said the upbeat revision comes after GDP growth between April and June surprised expectations with a 1.2% rise. Activity will continue to grow in the second half, though more slowly, it added. “The first releases for July suggest that industry, services, and the labor market continue to grow. The confidence series confirm the positive expectations for the third quarter, with widespread expansion in the various sectors,” the secretariat said in a statement.The ministry kept its GDP growth forecast of 2.5% for 2023.Private economists estimate that Latin America’s largest economy will expand 2.39% this year and just 0.5% next year, affected by the central bank’s sharp monetary tightening to tame inflation.Policymakers have already pushed interest rates to 13.75% from a record low of 2% in March last year.But the ministry again stressed that its much more optimistic prospects for 2023 are supported by greater private investment and historically high capital goods imports in relation to GDP.Despite the moderate deceleration expected for global growth, Brazil sees more jobs in the formal sector and increased services with greater productivity, added the secretariat.The ministry decreased its 2022 inflation forecast to 6.3% from 7.2% in July. For 2023, it was maintained at 4.5%. More