Aurelia Butler

HOSUR, India (Reuters) – At least 10 people received medical treatment, with two hospitalised, after a major fire on Saturday disrupted production at a key Tata Electronics plant in southern India which makes Apple (NASDAQ:AAPL) iPhone components.The incident is the latest to affect Apple’s iPhone supply chain just as the company is looking to diversify beyond China and sees India as a key growth market. It is also the latest in a string of incidents to affect Apple suppliers in India over the last few years.The fire occurred at the plant in the city of Hosur in Tamil Nadu state which makes some iPhone components. It broke out near another building inside the Tata complex which will in coming months turn out complete iPhones. The fire was contained to one building and has been extinguished fully, top district administrative official K.M. Sarayu said. No decision has been made on when manufacturing can restart, she said.”Fumes are still coming since it’s a chemical hazard. It will take time for the search and rescue team to go inside and do an assessment. We have to wait till tomorrow,” she added.Sarayu said that 523 workers were on shift when the fire broke out in the early morning and that all workers had been evacuated and accounted for.Savitri, an eyewitness who lives near the plant and only gave her first name, said she heard “loud sounds around 5.30 a.m. (midnight GMT) that sounded like crackers going off. After that we just saw plumes of smoke from the building, and there was thick smoke till at least 10 in the morning.”EMERGENCY PROTOCOLSTata Electronics is one of the major contract makers of iPhones in India, along with Foxconn. The company said it was investigating the cause of the fire and would take the necessary steps to safeguard employees and other stakeholders.”Our emergency protocols at the plant ensured that all employees are safe,” a Tata Electronics spokesperson said. J. Saravanan, a senior district official charged with handling industrial safety, said it was not yet possible to say when production at the facility will resume, as “we will need to go in to understand more, depending on the damage.”He said the injuries were all related to smoke inhalation but give no further detail.Production was halted and employees sent home for the day following the fire, a person with direct knowledge of the incident said earlier, describing the blaze as chemical-related.A second industry source said it was not yet clear if a neighbouring building where smartphone manufacturing was due to start by year-end had also been affected.With the facility inaccessible at the moment, the source said, an assessment of damage from the fire will have to be done later.Apple made no immediate comment on the incident. The fire began in an area used to store chemicals, a fire official said on condition of anonymity as he was not authorised to speak to the media.Last year, Apple supplier Foxlink halted production at its assembly facility in the southern Indian state of Andhra Pradesh after a massive fire led part of the building to collapse. More

Gen X is a critical segment of the U.S. economy that is often overlooked. Despite making up just 27% of households in 2022, they accounted for more than 33% of consumer expenditures, outpacing even Millennials.As of August 2024, Gen X’s discretionary spending fell by 2% year-over-year, indicating a marked shift in behavior.One of the primary reasons for this slowdown is the rising share of household spending on necessities. These include housing, utilities, and insurance, typically paid through non-card channels like ACH and bill pay. As necessity spending continues to increase, it squeezes the funds available for discretionary purchases. Another key factor is Gen X’s shift toward saving and investing as they age. BofA’s data indicates that investments per Gen X household are 40% higher than the average across all generations, suggesting that many in this cohort are prioritizing long-term financial security over short-term consumption. This trend is particularly strong among those approaching retirement, as over a third of Gen X plans to retire within the next 10 years, and many are increasing their contributions to 401(k) and other investment accounts.Additionally, Gen X faces unique financial pressures from both ends of the generational spectrum. Often referred to as the “sandwich generation,” they are frequently responsible for supporting not only their aging parents but also their adult children. A rising number of young adults aged 18 to 34 continue to live at home, and many rely on their parents for financial support. The U.S. Census Bureau reports that 23% of 18- to 24-year-olds live at home, while the number of 25- to 34-year-olds doing the same has doubled since 1960, reaching 10% in 2023. This adds to the financial burden on Gen X households, further limiting their ability to spend on non-essential items. While younger generations have seen robust wage growth in recent years, helping to boost their discretionary spending, Gen X has lagged behind. BofA Securities data shows that their wage growth has been slower compared to Millennials and Gen Z, making it harder for them to absorb rising costs of living while maintaining previous levels of discretionary spending. However, despite this slower wage growth, the expense-to-wage ratio for Gen X has remained relatively stable over the past few years, indicating that their reduced spending may be more a matter of choice than necessity.Going forward, while Gen X may eventually benefit from the “great wealth transfer” as Baby Boomers pass down trillions of dollars in assets, those financial windfalls are likely years away. In the meantime, the financial pressures of supporting both older and younger generations, combined with a focus on saving and investing for retirement, suggest that Gen X’s reduced spending may continue for the foreseeable future. More

Yardeni Research offers a pointed observation: the current environment resembles the conditions that led to a stock market “meltup” in the 1990s. A meltup refers to a sharp and unsustainable rise in asset prices driven more by a surge in investor sentiment than by improving fundamentals.Yardeni’s comparison to the 1990s is significant. During that period, the U.S. economy experienced low inflation and robust economic growth, creating an environment in which asset prices, particularly stocks, soared. A combination of factors, including aggressive monetary easing, low interest rates, and technological advancements, resulted in a prolonged bull market. However, this surge in stock prices, particularly in the tech sector, led to a bubble, which burst in the early 2000s.Yardeni suggests that the recent rate cuts, despite an already strong economy, set the stage for a similar trajectory. The stock market has already demonstrated signs of frothy valuations, and further easing could accelerate those trends. By removing recessionary risks, the Fed’s policy encourages more liquidity in the market, fueling a potential stock market rally driven by investor exuberance rather than solid economic fundamentals​.The decision to cut rates when unemployment is low and growth is solid carries inherent risks. According to Yardeni, the FOMC’s move could stimulate an economy that does not need further boosting. This policy could push asset prices into overvaluation territory, stretching valuations and increasing macroeconomic volatility. “Hence, we raised our subjective probability for a 1990s-style stock market meltup from 20% to 30% last week,” the analysts said. In the 1990s, the market’s meltup culminated in the dot-com bubble. Yardeni implies that a similar pattern could emerge if investors’ risk-taking is emboldened by low rates. The surge in liquidity could lead to excessive speculation, particularly in technology and growth stocks, where valuations are already stretched.FOMC Chair Jerome Powell’s decision to lower rates, Yardeni suggests, is likely motivated by a desire to prevent unemployment from rising significantly, especially after a period of high inflation. However, this choice to prioritize avoiding recession risks may increase the chances of overheating. Yardeni points out that Powell’s decision seems to avoid short-term economic pain at the cost of long-term stability, which could mirror the Fed’s approach in the 1990s.While Powell and other Fed officials argue that the current inflation outlook is benign and that further rate cuts will help steer inflation toward their 2% target, Yardeni expresses caution. Analysts flag the potential for higher long-term inflation and volatility as the market digests the consequences of easier monetary policy.Yardeni remains optimistic about the long-term prospects for productivity growth, which could allow the economy to grow without igniting runaway inflation. The analysts describes a “Roaring 2020s” scenario where technological advancements drive productivity and support sustained economic growth. Nevertheless, Yardeni warns that even if this optimistic scenario unfolds, a stock market meltup could lead to a subsequent correction or even a crash​. More

1) ‘How Should We Think About the Post-COVID Economy?:’ According to the note, fiscal support played a significant role in sustaining consumer demand during the pandemic, with excess savings boosting spending in the years that followed. However, the policy mix in many advanced economies is currently unbalanced.”Budget deficits are too large and interest rates are too high,” the note highlights. A rebalancing towards tighter fiscal policy and looser monetary policy is considered necessary to restore stability.On the supply side, the pandemic caused significant dislocations, shifting the aggregate supply curve inward.At the same time, monetary and fiscal expansion shifted the demand curve outward, leading to the inflation seen in 2021-22.As these dislocations have faded, economies like the US have benefited from increased immigration, which boosted labor supply. That shift has allowed for higher output with lower inflation, raising the possibility of a soft landing, where inflation can be controlled without tipping economies into recession.2) ‘Why Has Europe Lagged the US?:’In the report, Capital Economics points out a clear underperformance of Europe compared to the US.Since the pre-COVID period, the US economy has grown by nearly 10%, while the eurozone has expanded by only 3.9%.One common explanation is the prevalence of fixed-rate mortgages in the US, which have shielded households from rising interest rates more effectively than in Europe. However, Capital Economics argues that the data doesn’t fully support this, pointing instead to smaller fiscal support and the energy shock following Russia’s invasion of Ukraine as the key reasons for Europe’s struggles.In addition, the structural weaknesses in key industries, particularly in Germany, are expected to persist.“Accordingly, we expect that the euro-zone economy will continue to experience extremely low rates of growth and our GDP forecasts remain below that of the consensus,” the note writes.The European Central Bank is anticipated to gradually ease rates, but this may not be enough to significantly stimulate growth in the region.3) ‘What Are the Key Risks to the Outlook?:’Capital Economics identifies several risks that could disrupt the global economic outlook. The biggest concern is a potential hard landing or recession in the US, though the firm still believes a soft landing is the most likely scenario.Political risks also loom large, with the US election posing uncertainty. Measures floated by Donald Trump during his campaign could “reduce US GDP and raise inflation,” although the note suggests that these proposals may be diluted in practice.China’s economic struggles also present a potential risk, but Capital Economics emphasizes that these problems are structural, and a sudden collapse in China’s economy is not anticipated. Moreover, the threat of geopolitical shocks, such as a conflict between China and Taiwan or disruptions in the Middle East, cannot be ignored.Finally, rising public debt in advanced economies is viewed as a significant long-term risk.”Budget deficits have ballooned, and public debt burdens are high and rising,” the note warns, particularly in light of upcoming elections in the US and Germany. Any perception of fiscal drift could cause turmoil in global bond markets.“Sometimes the biggest risks are hiding in plain sight,” the report concludes. More