Evelyn Reynolds

The Financial Action Task Force removed Turkey from its “gray list” of countries that need special monitoring, handing a major vote of confidence to the country in the midst of its economic turnaround efforts.
The FATF in its 2021 report had found sectors like banking, construction and property in Turkey vulnerable to illicit financing of groups like the Islamic State and al-Qaeda.

As the sunsets, a ferry boat glides across the waters of the Golden Horn with the Suleymaniye Mosque and the city of Istanbul, Turkey in the background. 
Vw Pics | Universal Images Group | Getty Images

The Financial Action Task Force, an international watchdog organization dedicated to combating money laundering and illicit cash flows, on Friday removed Turkey from its “gray list” of countries that need special monitoring, handing a major vote of confidence to the country in the midst of its economic turnaround efforts.
“The FATF welcomes Türkiye’s significant progress in improving its AML/CFT regime,” the Paris-based organization wrote in its latest report, using the Turkish government’s spelling of its country’s name and the acronym for anti-money laundering and combating the financing of terrorism.

It said that Turkey had strengthened the effectiveness of its AML/CFT regime to address “deficiencies” that FATF listed in its October 2021 monitoring report.
Those deficiencies included FATF concerns over unregistered money transfer services, insufficient resources dedicated to terrorist financing investigations, alleged involvement in sanctions evasion, lack of oversight on high-risk sectors used for money laundering such as banking and real estate, and insufficient oversight of nonprofit organizations that could be used for terrorist financing, among others.
The FATF in its 2021 report had found sectors like banking, construction and property in Turkey vulnerable to illicit financing of United Nations-sanctioned groups like the Islamic State and al-Qaeda.

The watchdog organization concluded in its 2024 findings that Turkey is “no longer subject to the FATF’s increased monitoring process,” but that it “should continue to work with the FATF to sustain its improvements in its AML/CFT system, including by continuing to ensure its oversight of the NPO [nonprofit organization] sector is risk-based and in line with the FATF standards.”
Turkey’s government welcomed the news, its finance minister, Mehmet Simsek, writing on social media platform X, “We did it,” alongside a Turkish flag emoji as the decision was announced, according to a Google translation from Turkish.

Turkish Vice President Cevdet Yilmaz said: “With this development, international investors’ confidence in our country’s financial system has become even stronger. The decision will have extremely positive consequences for the financial sector and the economy.”
The FATF’s announcement will likely come as a boost to Turkey’s economic turnaround efforts after years of high inflation, a depreciating local currency and inconsistent foreign investment levels.
Mohamed Daoud, industry practice lead at Moody’s ratings agency, described the positive impact the new designation is likely to have.
“Turkey’s removal from the Financial Action Task Force (FATF) Grey List recognizes the significant progress made by the Turkish government and various economic sectors in strengthening their fight against money laundering and terrorist financing,” Daoud said.
“This development is expected to boost Turkey’s reputation internationally, potentially boosting foreign investment and relationships with European and U.S. institutions.” More

Interest in everything related to Western fashion is driving up demand for denim clothing such as skirts and dresses, according to San Francisco-based Levi Strauss.
The frenzy comes as Western wear has gained a groundswell of cultural support that’s caught the attention of the consumers, not to mention the retailer’s chief executive and Wall Street.

A Levi’s store at the Orlando Vineland Premium Outlets in Florida.
Jeff Greenberg | Universal Images Group | Getty Images

In a lyric on her latest album, Beyoncé sings “denim on denim, on denim, on denim.”
Levi Strauss shoppers are taking that advice to heart. Levi Strauss executives are ecstatic.

Western wear is booming as consumers opt for top-to-bottom denim looks, the iconic, 171-year-old clothing maker said on Wednesday. As the style wins cultural favor, its popularity is juicing denim niches — like shirts, skirts and dresses — that fall outside Levi’s widely-known blue jean offerings.
“The growing popularity of Western wear is at an all-time high,” CEO Michelle Gass told analysts Wednesday night after the California-based retailer’s latest earnings report for the quarter ended in May.
A Western renaissance has been gaining traction over the past several months, sending stylish shoppers searching for pieces like jeans, boots and cowboy hats. Levi’s scored a huge hit when its jean brand was referenced in Beyoncé’s song “Levii’s Jeans,” released earlier this year.
Beyond Beyoncé’s chart-topping “Cowboy Carter” album, the increased ubiquity of Western style has also been tied to a fashion line unveiled by Louis Vuitton earlier this year and Taylor Swift’s ongoing Eras Tour.

Read more CNBC analysis on culture and the economy

Gass, who took over as Levi Strauss CEO earlier this year after previously serving as the CEO at Kohl’s, has touted that denim is having a moment in the popular imagination, with Western wear trending more broadly throughout the culture.

More specific data shared on the company’s earnings call Wednesday showed how Levi Strauss is taking advantage of demand for denim beyond its popular “501” jeans. Sales of denim skirts, jumpsuits and dresses all at least doubled in the latest quarter, Gass said. Western shirts sales are also up significantly, she said, especially on the women’s side.
Levi is find success in what the 55-year-old chief executive described as a new strategy of trying to dress customers denim — from head-to-toe.
“Our new focus is, yes, continuing to own jeans, but taking that denim top to bottom,” Gass said on CNBC’s “Mad Money” late Wednesday. While noting that the denim skirt and dress categories haven’t been historically large for the company, now “they’re exploding,” she said.

Denim rage sets a high bar on Wall Street

To be sure, the well-documented denim craze alone isn’t necessarily impressing Wall Street. Levi Strauss tumbled more than 15% on Thursday in response to its latest numbers, its second worst day since going public in early 2019.
Levi Strauss posted $1.44 billion in revenue in the fiscal second quarter, slightly missing the $1.45 billion consensus forecast of analysts polled by LSEG despite the denim boom. The company’s finance chief told CNBC that the sales miss was driven by unfavorable foreign exchange rates and weakness in the Dockers brand.
On the other hand, Levi Strauss earned 16 cents per share, excluding items, ahead of the 11-cent average estimate by analysts.
In the year through Wednesday, shares had run up amid the buzz around the cotton-based fabric and the resurgence of Western clothing. Following Thursday’s drop, the stock is still up more than 18% on the year. For comparison, shares of Kontoor Brands, the parent of denim brands Wrangler and Lee, have risen 5% year to date.

Stock chart icon

Levi Strauss, year to date

Wells Fargo analyst Ike Boruchow said that for “one of the most crowded longs in the space today,” Levi’s second-quarter release “was simply not good enough.” In other words, the company missed what was an admittedly high bar, he said.
Citigroup analyst Paul Lejuez, meanwhile, thought Levi’s most recent quarter was good, but cited the wholesale business’s performance and the potential for European sales to continue struggling in the second half of the year as grounds for concern.
Lejuez pointed to several tailwinds as grounds for optimism on the stock. Two of his reasons driving excitement — new styles and fits — are common for a clothing maker.
Lejuez’s final one was more unique: Beyoncé.
— CNBC’s Gabrielle Fonrouge and Julie Coleman contributed to this report

Don’t miss these insights from CNBC PRO More

A customer shops at a Safeway store on June 11, 2024 in San Francisco, California.
Justin Sullivan | Getty Images

An important economic measure for the Federal Reserve showed Friday that inflation during May slowed to its lowest annual rate in more than three years.
The core personal consumption expenditures price index increased just a seasonally adjusted 0.1% for the month and was up 2.6% from a year ago, the latter number down 0.2 percentage point from the April level, according to a Commerce Department report.

Both numbers were in line with the Dow Jones estimates. May marked the lowest annual rate since March 2021, which was the first time in this economic cycle that inflation topped the Federal Reserve’s 2% target.

Including food and energy, headline inflation was flat on the month and also up 2.6% on an annual basis. Those readings also were in line with expectations.
Outside of the inflation numbers, the Bureau of Economic Analysis report showed that personal income rose 0.5% on the month, stronger than the 0.4% estimate. Consumer spending, however, increased 0.2%, weaker than the 0.3% forecast.
Prices were held in check during the month by a 0.4% decline for goods and a 2.1% slide in energy, which offset a 0.2% increase in services and a 0.1% gain for food.
However, housing prices continued to rise, up 0.4% on the month for the fourth straight time. Shelter-related costs have proven stickier than Fed officials have anticipated and have helped keep the central bank from reducing interest rates as expected this year.

Stock market futures were modestly positive following the report while Treasury yields were negative on the session.
Investors have been trying to handicap the Fed’s intentions on rates this year and have had to scale back expectations. Whereas traders earlier in 2024 had been expecting at least six rate cuts this year they are now pricing in just two, starting in September.
“The lack of surprise in today’s PCE number is a relief and will be welcomed by the Fed,” said Seema Shah, chief global strategist at Principal Asset Management. “However, the policy path is not yet certain. A further deceleration in inflation, ideally coupled with additional evidence of labor market softening, will be necessary to pave the way for a first rate cut in September.”
The Fed targets 2% inflation and began raising interest rates in March 2022 after a year of dismissing rising prices as transitory effects from the Covid pandemic that likely would fade. The central bank last raised rates in July 2023 after taking its benchmark overnight borrowing level to a range of 5.25%-5.5%, the highest in some 23 years.
Recent economic data has painted a picture of an economy that has withstood the Fed’s aggressive monetary tightening. Gross domestic product rose at a 1.4% annualized rate in the first quarter and is on pace to increase 2.7% in the second quarter, according to the Atlanta Fed.
There have been some slight cracks in the labor market lately, with continuing jobless claims hitting their highest level since November 2021. However, the unemployment rate is still 4%, low by historical means though also rising at a slow pace.
This is breaking news. Please check back for updates. More

The personal consumption expenditures price index, an inflation measure the Federal Reserve watches closely, is expected to show little, if any, monthly increase for May.
When stripping out volatile food and energy prices, the core PCE price index is set to indicate its lowest annual reading since March 2021.
The Commerce Department releases the inflation readings, along with reports on personal income and spending, Friday at 8:30 a.m. ET.

People purchase beverages in a store on a sweltering afternoon in Brooklyn, New York, on the first day of summer on June 21, 2024.
Spencer Platt | Getty Images

There could be some pretty good inflation news on the way from the Commerce Department when it releases a key economic report Friday.
The personal consumption expenditures price index, an inflation measure the Federal Reserve watches closely, is expected to show little, if any, monthly increase for May, the first time that would be the case since November 2023.

But even more importantly, when stripping out volatile food and energy prices, the core PCE price index, which draws even closer scrutiny from Fed policymakers, is set to indicate its lowest annual reading since March 2021.
If that date rings a bell, it’s when core PCE first passed the Fed’s coveted 2% inflation target during this cycle. Despite a series of aggressive interest rate increases since then, the central bank has yet to wrest the pace of price increases back into its target range.
The official Dow Jones forecasts for Friday’s numbers are for the headline, or all-item, PCE price reading to come in flat on the month, while core is projected to rise 0.1%. That would compare to respective increases of 0.3% and 0.2% in April. Both headline and core are forecast at 2.6% on a year-over-year basis.
Should the core PCE price forecasts transpire, it will serve as a milestone of sorts.
“We are in line with [the forecast] that the PCE core pricing data will come in soft,” said Beth Ann Bovino, chief economist at U.S. Bank. “That’s good news for the Fed. It’s also good for people’s pocketbooks, although I don’t know if people feel it just yet.”

Indeed, while the rate of inflation has receded precipitously from its mid-2022 peak, prices have not. Since that March 2021 benchmark, core PCE is up 14%.
That steep climb and its pernicious effect is why Fed officials are not ready to declare victory yet, despite the obvious progress made since the rate hikes began in March 2022.
“Returning inflation sustainably to our 2% target is an ongoing process and not a fait accompli,” Fed Governor Lisa Cook said earlier this week.
Cook and her colleagues have been circumspect about the timing and pace of rate cuts, though most agree that easing is likely at some point this year as long as the data stays in line. Futures markets are currently pricing in a good likelihood that the Fed will enact its first quarter-percentage-point cut in September, with another to follow by the end of the year. Policymakers at their meeting earlier this month penciled in just one cut.
“We do expect softening in the real economy — not falling off a cliff, just softening — that suggests that inflation will be softer as well later on. That gives us reason to expect the Fed will be able to likely have their first cut in September,” Bovino said.
“Now we all know it depends on the data and the Fed is still watching,” she added. “Could they wait? Could it just be a one and done this year? I can’t rule it out. But it does look like the numbers might give the Fed cover to cut rates two times this year.”
In addition to the inflation numbers, the Commerce Department at 8:30 a.m. ET will release figures on personal income and consumer spending, with estimates at a rise of 0.4% and 0.3%, respectively.

Don’t miss these insights from CNBC PRO More