Aurelia Butler

Amazon will pay $61 per share, valuing iRobot at a premium of 22% from the stock’s last closing price of $49.99. At its peak, the Roomba maker traded at $197.4 as hygiene-conscious consumers invested in premium robot vacuum cleaners during pandemic lockdowns.Besides sweeping up dirt, the Roomba vacuums that costs as much as $1,000 collect spatial data on households that could prove valuable to companies developing so-called smart home technology.However, iRobot’s second-quarter revenue fell 30% due to weak demand and cancellations from retailers in North America and Europe, Middle East and Africa as consumers rethink how they spend their money during rising inflation.Analysts have said cash-rich big technology companies could get on an M&A spree, taking advantage of low valuations due to growth pressures. Amazon is sitting on cash and cash-equivalents of over $37 billion as of the second quarter. Devices make up for a fraction of the overall sales of Amazon, which sells smart thermostats, security devices, wall mounted smart display and had recently launched a canine-like robot called Astro.In case the deal is terminated, Amazon would be required to pay iRobot a termination fee of $94 million. On completion of the deal, Colin Angle will remain as the chief executive of iRobot.Amazon is also buying primary care provider One Medical for $3.49 billion, expanding the e-commerce giant’s virtual healthcare and adding brick-and-mortar doctors’ offices for the first time. (This story corrects to say revenue fell 30%, not 37%, in paragraph 5) More

(Reuters) – Wall Street’s main indexes were set to open sharply lower on Friday as a solid jobs report bolstered the case for the Federal Reserve to continue on its aggressive policy tightening path.Data showed U.S. employers hired far more workers than expected in July, with the unemployment rate falling to a pre-pandemic low of 3.5%, the strongest evidence yet that the economy was not in recession.”What we have heard from the various Fed governors this week about it being too early to pivot away from a tightening policy is definitely in place with the jobs report that is ‘this hot’,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.”It gives the Fed reason to continue to raise rates and that is what got the market on edge.”A bevy of policymakers have this week near uniformly flagged the central bank remains determined to press ahead with rate hikes until it sees strong and long-lasting evidence that inflation is trending lower towards the Fed’s 2% goal.Markets are now pricing in a 65.5% chance of a 75-basis-point interest rate hike in September, up from 40% before the data. The central bank has already increased rates by 2.25 percentage points so far this year. U.S. Treasury yields extended their rise after the report, likely putting pressure on high-growth stocks such as Apple (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOGL).Worries about an aggressive rise in borrowing costs, the war in Ukraine, Europe’s energy crisis and COVID-19 flare-ups in China have rattled equities this year and prompted investors to adjust their earnings expectations for corporate America.However, the second-quarter earnings season has showed companies were far more resilient than estimated. Of the 410 S&P 500 companies that have reported earnings so far, 77.1% reported above analyst expectations, according to Refinitiv data.At 8:46 a.m. ET, Dow e-minis were down 203 points, or 0.62%, S&P 500 e-minis were down 39.75 points, or 0.96%, and Nasdaq 100 e-minis were down 169 points, or 1.27%. Lyft Inc (NASDAQ:LYFT) rose 6.6% in premarket trading as the ride-hailing firm forecast an adjusted operating profit of $1 billion for 2024 after posting record quarterly earnings.DoorDash Inc gained 5.1% after the food delivery firm raised annual target for a key industry metric, saying it does not expect a slowdown in demand as consumers continue to order in despite decades-high inflation.Block Inc fell 7.1% as the digital payments company slowed hiring and said it will slash 2022 investment target by $250 million, after a slump in bitcoin prices drove the Jack Dorsey-led firm to a loss in the second quarter. More

Analysts surveyed by Reuters had expected an increase of 20,000 jobs in July, and for the unemployment rate to increase to 5.0%.Market reaction: CAD/STORY:Link:https://www150.statcan.gc.ca/n1/daily-quotidien/220805/dq220805a-eng.htmCOMMENTARYDOUG PORTER, CHIEF ECONOMIST AT BMO CAPITAL MARKETS”On the whole, it’s a modest disappointment. I think the overall impression is that job growth was cooling but this is clearly weaker than expected.””I think there’s some issue whether this slowdown is more driven by demand or by supply. In other words, we did see another drop in the participation rate in the labour force in the month and I find it notable that most of the weakness was in healthcare and education.””But, overall, the main takeaway here is that the job market is still very tight. We’re still dealing with the lowest unemployment rate in at least 50 years, and wages that are running strong. But from a growth angle the reality is employers are having trouble finding employees, and, so that caps the growth of the economy.””We were assuming that the Bank of Canada would be slowing its pace of rate hikes in incoming meetings and this report fits with that view. I don’t believe things are nearly weak enough to call a halt to rate hikes. We had penciled in a 50 basis point rate hike in September and I would say we’re comfortable with that call based on today’s numbers.”ANDREW GRANTHAM, SENIOR ECONOMIST, CIBC CAPITAL MARKETS”The Canadian employment figures were somewhat of a head-scratcher again in July, with employment falling for a second consecutive month but the unemployment rate remaining historically low.””Job losses were strangely concentrated in the services sector, including wholesale & retail, education and health. With some of those sectors reporting high vacancy rates; labour supply rather than demand appears to be the main issue. That said, the major difference between today’s report and last month’s is that wage growth unexpectedly decelerated.””While today’s figures muddy the waters further for policymakers, the Bank of Canada will likely focus on the historic low unemployment rate and still strong wage growth to justify another non-standard rate hike at its next meeting.”DEREK HOLT, VICE PRESIDENT OF CAPITAL MARKETS ECONOMICS, SCOTIABANK”It’s disappointing all round. Unlike the last time, that was driven by self-employed, this time I think there is much greater underlying weakness.””I don’t think it’s going to knock the Bank of Canada off course or hold them back at all. I think they know full well that fighting inflation is going to break a few things and one of them will be slowing job market momentum as a part of that. That’s a needed outcome.” More

WASHINGTON (Reuters) – U.S. employers hired far more workers than expected in July, with the unemployment rate falling to a pre-pandemic low of 3.5%, providing the strongest evidence yet that the economy was not in recession.Nonfarm payrolls increased by 528,000 jobs last month, the Labor Department said in its closely watched employment report on Friday. Data for June was revised higher to show 398,000 jobs created instead of the previously reported 372,000. That marked the 19th straight month of payrolls expansion. The unemployment rate was at 3.6% in June.Economists polled by Reuters had forecast payrolls rising by 250,000 jobs and the unemployment rate steady at 3.6%. Estimates ranged from as low as 75,000 to as high 325,000 jobs.The employment report painted a picture of a fairly healthy economy muddling despite back-to-back quarters of contraction in gross domestic product. Demand for labor has eased in the interest rate sensitive sectors like housing and retail, but airlines and restaurants cannot find enough workers.Strong job growth could keep pressure on the Federal Reserve to deliver a third 75 basis point interest rate increase at its next meeting in September, though much would depend on inflation readings. The U.S. central bank last week raised its policy rate by three-quarters of a percentage point. It has hiked that rate by 225 basis points since March.The economy contracted 1.3% in the first half, largely because of big swings in inventories and the trade deficit tied to snarled global supply chains. Still, momentum is slowing.The National Bureau of Economic Research, the official arbiter of recessions in the United States, defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators.” With 10.7 million job openings at the end of June and 1.8 openings for every unemployed person, the labor market remains tight and economists do not expect a sharp deceleration in payrolls growth this year.Average hourly earnings increased 0.5% last month after rising 0.4% in June. That left the year-on-year increase in wages at 5.2%. Though wage growth appears to have peaked, pressures remain. Data last week showed annual wage growth in the second quarter was the fastest since 2001. More

OTTAWA (Reuters) -Canada’s economy unexpectedly lost jobs for the second month in a row in July after a year-long boom, while the unemployment rate stayed at a record low 4.9%, official data indicated on Friday.Statistics Canada reported 30,600 positions were shed, marking the second month in a row of relatively moderate losses. Between May 2021 and May 2022, the economy added a hefty 1.06 million jobs as the recovery from COVID-19 took hold.Analysts polled by Reuters had expected an increase of 20,000 positions and for the jobless rate to edge up to 5.0%.The average hourly wages of permanent employees – a figure the Bank of Canada watches closely – rose by 5.4% from July 2021, down from the 5.6% year-on-year increase seen in June but sharply higher than the 2.4% seen at the start of the year.Derek Holt, vice president of capital markets economics at Scotiabank, said the July figures were disappointing but predicted Canada’s central bank would keep raising interest rates in its bid to crush inflation.”I think they know full well that fighting inflation is going to break a few things, and one of them will be slowing job market momentum,” he said.The central bank last month surprised markets by raising its main interest rate by 100 basis points in a bid to tackle inflation, and said more hikes would be needed.The number of public sector employees dropped by 51,000 in July, the first decline in 12 months.The services sector shed 53,200 jobs while the goods sector added 22,600 jobs. Statscan said there was no indication of increased job churn despite the tight labor market. The central bank’s next fixed rate announcement is on Sept. 7, with the August jobs data due out on Sept 9.”The Bank of Canada will likely focus on the historic low unemployment rate and still strong wage growth to justify another non-standard rate hike at its next meeting,” said Andrew Grantham, senior economist at CIBC Capital Markets.The Canadian dollar was trading 0.6% lower at 1.2945 to the greenback, or 77.25 U.S. cents, in part pushed down by strong U.S. jobs data. More

Central bankers are tasked with preserving the value a currency by keeping inflation in check. For this purpose many of them are shielded from political pressure from governments.Once a sacred cow in the Western World, this independence has been called into question more often in recent years as central banks stepped in to prop up governments when they were hit by the global financial crisis and then by the coronavirus pandemic. Here are some questions and answers about a topic that is quickly spilling over from academia into the political domain and could have a profound impact on inflation in the next decades.WHAT HAPPENED? The front-runner to become Britain’s next prime minister, Liz Truss, has promised to review the Bank of England’s remit — potentially including its ability to set interest rates free from government interference. This came after the UK’s central bank raised rates by the most since 1995 on Thursday while also forecasting a long recession and double-digit inflation — a double whammy to household finances.The BoE’s governor Andrew Bailey is not alone. Central bankers across the world are under fire from politicians for failing to predict and prevent the current bout of high inflation.WHAT IS CENTRAL BANK INDEPENDENCE AND WHY DOES IT MATTER?A central bank is independent if it can make policy, such as setting interest rates or printing money, without interference from elected officials or the private sector.The idea is that governments would lean on the central bank to engineer a boom when they need re-election and stop rate hikes that would be too painful for their voters.This would cause the economy to overheat and inflation to run too high until an inevitable bust.Instead, central bankers should squarely focus on inflation, sometime married with another goal such as full employment, and let politicians deal with questions of redistribution and fairness.DOES IT WORK?Data shows that central banks that were more independent, such as those of Germany, Austria and Switzerland, achieved lower inflation between 1970 and 1999 than those with closer ties to their governments, for example in Norway, New Zealand and Spain. But this relationship became weaker in the new millennium as new forces came into play, such as greater globalisation and the introduction of the euro. The alternative, however, is hard to stomach.In Argentina, where the central bank is firmly under the president’s control, inflation is nearing triple digit, the peso has lost half its value in less than 1-1/2 years and citizens face restrictions if they want to buy foreign currency or sell goods abroad. ARE MOST CENTRAL BANKS INDEPENDENT?Most central banks in the developed world and many in emerging economies are formally independent, albeit to varying degrees.In practice, the line between central banks and governments can get blurry and is in some cases little more than a polite fiction. Turkey’s central bank is formally independent but that hasn’t stopped the country’s president, Tayyip Erdogan, from sacking governor after governor if they didn’t grant his wishes.Even in the United States and Europe, central bankers are routinely accused of bankrolling states with massive purchases of government debt, which have become common since the global financial crisis.While these ‘quantitative easing’ programmes are always justified with the need to boost inflation when it’s too low, they place central bankers working shoulder to shoulder, rather than at arm’s length, with their governments. This was nowhere more visible than in Japan, where the central bank owns half of the government’s debt. HAS CENTRAL BANK INDEPENDENCE ALWAYS BEEN THE NORM?No, central banks were until recently an arm of the government.The idea of having a fully independent central bank was discussed by economist Milton Friedman in 1962, who dismissed it on the ground that it wouldn’t survive the first “real conflict” with government. The Federal Reserve has enjoyed operational independence since 1951 but presidential interference lasted at least into the 1970s.The then Fed chair Arthur Burns came under pressure to keep policy easy in order to help U.S. President Richard Nixon win re-election. The ensuing, decade-long bout of high inflation, triggered by an oil shock that Burns’ Fed sought to accommodate, boosted the idea of central bank independence.This gained currency in the 1980s and took off in the 1990s, when many central banks, including the Bank of England, were reformed and more were created in what used to be the Eastern Bloc. More