US Economy


US corporate tax cuts fuel share buybacks, not investment

By Leith van Onselen Treasurer Scott Morrison has confirmed that the Turnbull Government will persist with its policy of progressively reducing the tax rate for all companies, claiming they are essential to fuel investment, jobs and wages growth. From The AFR: “We’ve had significant success already in delivering tax cuts for small and medium-sized businesses


Um, hello, China selling Treasuries is a good thing

Some nice MSM panic today via Reuters: Whether China is reducing its vast holdings of U.S. Treasury bonds is a persistent question in global markets, and the recent escalation in trade tensions between the world’s two largest economies means the question is increasingly on investors’ minds. The U.S. Treasury’s latest report on international capital flows


US profits have room to boom

Via Moody’s: Profits Growth Curbs Defaults First quarter 2018’s earnings season has arrived. Though the annual increase of corporate revenues is expected to slow from its pace of 2017’s final quarter, operating income is expected to quicken. Tax cuts and the containment of labor costs help to explain the expected improvement in operating leverage, or


Do Americans support Donald’s China trade war?

That’ll decide it in the end. From The Hill: A strong majority of Americans believe the U.S. should take steps to correct its trade deficit with China, but a majority disapprove of President Trump’s proposed tariffs and there are fears that a trade war could damage the economy. According to the latest Harvard CAPS/Harris Poll, 71 percent


Previewing US jobs

From Goldman: We estimate that nonfarm payrolls increased 200k in March, 15k above consensus. While we believe elevated snowfall will cause job growth to decelerate from the +276k average pace in the prior two months, labor market fundamentals remain solid and appear to have improved further. …we estimate the unemployment rate fell to 4.0% in March.


Australian dollar hammered as volatility rules

DXY rebounded last night: The Australian dollar was hammered against everything: Gold slumped: Oil too: Base metals were mixed: Big miners hit: EM stocks too: Junk eased: The Treasury curve was hammered: Bunds were bought: And stocks gave up a lot of yesterday’s gains: The WSJ has some nice perspective: …some investors are putting trade-war


US moves to prevent China “infiltration” of universities

The Dastayari Afifar goes global, via Campus Reform: Several Republican lawmakers are backing a new bill that would further tighten the screws on Chinese “Confucius Institutes” in U.S. colleges and universities. The bill, S.2583, was introduced by Republican Senators Marco Rubio and Tom Cotton, and is intended to amend two laws in order to make it


Trump’s tax cuts risk 1970s-style stagflation

By Leith van Onselen JP Morgan’s Joseph Lupton forecasts that the US economy will expand by 1.25% over the next two years thanks to President Donald Trump’s company tax cut package, but that the tax cuts could potentially lead to 1970s-style stagflation, noting that fiscal conditions in the US at present are similar to those


Friday is tariff day!

Via WaPo: President Trump is preparing to impose a package of $60 billion in annual tariffs against China, following through on a long-time threat that he says will punish China for intellectual property infringement and create more American jobs. The tariff package, which Trump plans to unveil by Friday, was confirmed by four senior administration


Idiot (box) takes control of US economy

Via the WSJ: President Donald Trump has offered Lawrence Kudlow the job as director of the National Economic Council and he accepted, making the economic commentator one of the president’s top economic advisers, Mr. Kudlow said in an interview. We’ve all watched Kudlow for years on CNBC spout his supply-side Reaganomics drivel. Calculated Risk records


Goldilocks US jobs renew stocks boom

DXY was stable Friday night: AUD ran wild as iron ore crashed. Go figure: Gold was stable: Oil took off as the US rig count eased slightly: Base metals rebounded: Big miners did too, weakly: EM stocks flew: Junk firmed: Treasuries were sold a little: Bunds too: Stocks went completely nuts: And here’s why. US


US jobs preview

Via Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for February. The consensus, according to Bloomberg, is for an increase of 205,000 non-farm payroll jobs in February (with a range of estimates between 152,000 to 230,000), and for the unemployment rate to decline to 4.0%. The BLS reported 200,000


US boom warms up

DXY was up a little last night: AUD fell against DMs: But rose against EMs: Gold was hit: Oil fell: Dirt fell: Miners fell: EM stocks fell: Junk fell: Treasuries were stable: And bunds: Stocks gained a little: Stocks were helped by possible exceptions in Trump tariff war. Meanwhile, the US boom is warming up


US mulls broad China trade curbs

As Cohn goes so Navarro rises, via Bloomberg: The Trump administration is considering clamping down on Chinese investments in the U.S. and imposing tariffs on a broad range of its imports to punish Beijing for its alleged theft of intellectual property, according to people familiar with the matter. The U.S. Trade Representative’s office last year


Trump tax cuts flow…exactly where you’d expect

Via the FT: US companies are on track this year to return a record $1tn to shareholders, as Donald Trump’s tax cuts prompt boards to boost buybacks and dividends at a faster rate than their capital expenditure, research and development budgets or wage bills. Goldman Sachs estimated in February that buybacks would jump by 23 per