Business News Archives for 2022-08

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Stocks fell for a third day, putting a summer market comeback in doubt as the Federal Reserve and other global central bankers continued to signal they will raise interest rates to squash inflation despite the negative consequences for economic growth and, potentially, corporate profits.


Companies sharply slowed the pace of hiring in August amid growing fears of an economic slowdown, according to payroll processing company ADP.  Private payrolls grew by just 132,000 for the month, a deceleration from the 270,000 gain in July, the firm said in its monthly payroll report.  The Dow Jones estimate for the ADP count was 300,000.


Lower gas prices helped consumer confidence bounce back in August, breaking a three-month stretch of worsening sentiment.  However this improvement, while welcome, is tempered by ongoing worries that the US economy may be heading toward a recession.  The Conference Board's monthly snapshot of consumer attitudes improved, rising to 103 from July's downwardly revised 95.

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As the fallout from Jackson Hole continues to ripple through markets, investors have their eyes on more drama stemming from the central bank. The Federal Reserve this week is set to raise the throttle of its quantitative tightening (QT) program by picking up the pace at which it unwinds its balance sheet. Note that the central bank is not selling its Treasury holdings outright, but is rather letting them mature to shrink its balance sheet. After an initial few months at a slower pace, monthly caps for offloading Treasuries is set to double to $65bn.

Home prices in June were 18% higher than during the same month last year, according to the S&P CoreLogic Case-Shiller Indices. In the last 35 years, only four complete years have witnessed increases that large. Another report last week showed home prices declined 0.77% from June to July. While the drop may seem small, it is the largest single-month decline in prices since January 2011. It is also the second-worst July performance dating back to 1991

U.S. airline sales took a sizable step back during the last week of data tracked by Bank of America, and the team thinks that if the booking softness is not reversed in the next couple of weeks, it would indicate more of an underlying demand problem.  Bookings were down -23.6% vs. the level seen in 2019 for the week ending August 21.

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The economic symposium down in Jackson Hole was about as hawkish as investors could have expected, sending markets into a tailspin on Friday. All three major averages slumped between 3%-4%, sending risk-off signals to other sectors and asset classes (Bitcoin fell below $20K for the first time since early July). Sentiment may remain dented in the week ahead, or stay at somewhat of a standstill until the release of fresh market data (home prices on Tuesday and the jobs report on Friday).


Facebook parent Meta Platforms has reached an undisclosed settlement in a class-action lawsuit filed over the infamous Cambridge Analytica scandal. The episode saw the U.K. consulting firm harvest up to 87M Facebook users' data for use in political ad campaigns. The two sides provided no details about the settlement, although some had speculated that META could face hundreds of millions of dollars in damages if it lost the suit.


Chinese tech stocks, including Alibaba,, and Baidu gave up their gains on Friday, and are slipping again this morningt, despite an agreement to let American auditors access to New York-listed Chinese firms. The preliminary deal was signed off by the SEC, the Public Company Accounting Oversight Board (PCAOB), the China Securities Regulatory Commission and the Ministry of Finance of the People's Republic of China. According to the PCAOB, inspectors can already be on the ground by the middle of next month to begin inspections.

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Personal consumption expenditures, one of the Federal Reserve’s favorite inflation indicators, slipped on a monthly basis in July and was up less on the year than anticipated.  The inflation measure fell 0.1% in July and was up 6.3% on the year, according to the Bureau of Economic. It was expected that the PCE index would be unchanged on a monthly basis in July and up 6.4% on the year.  The report also showed that personal income ticked up less than expected, up 0.2% month over month versus an estimated 0.6%. It’s one of the reports the Fed will be watching ahead of its September meeting, when it is likely to raise interest rates again.

The first revision for second-quarter GDP painted a slightly less dour picture for the U.S. economy.  The Bureau of Economic Analysis said GDP contracted by 0.6% in the second quarter. The advance estimate released last month showed a decline of 0.9%.

The labor market continues to see strength with initial filings for unemployment benefits falling last week according to the Labor Department.  Jobless claims came in 243,000 for the week ended Aug. 20, down 2,000 from the prior week. It was also lower than consensus estimates of 255,000.

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New home sales plunged in July as high prices and mortgage rates pushed buyers to think twice about closing the deal.  Sales of newly constructed homes fell by 12.6% in July from June and were down 29.6% from a year ago, according to a joint report from the US Department of Housing and Urban Development and the US Census Bureau. It was the second consecutive month of declines.  Only 511,000 new homes were sold last month, at a seasonally adjusted annualized rate, down from a revised 585,000 in June. That's the lowest sales number since January 2016. A year ago, 726,000 newly constructed homes were sold.

Les Schwab Tire Centers named a new CEO on Tuesday, promoting chief financial officer Mike Broberg to take over the business early next year. Les Schwab is among Oregon’s largest companies, with 8,000 employees at 500 locations across 10 western states. Annual sales were approaching $2 billion at the time of Schwab’s sale two years ago to a California investment fund, Meritage Group.

Shares of the department store Nordstroms tumbled more than 12% after the company slashed their financial forecast for the full year.  Nordstrom said they are facing a glut of inventory that it must discount to move off shelves. The company did report fiscal second-quarter earnings and sales ahead of analysts’ estimates.


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US Stocks continued their selloff that started last week suffering their worst day since early June yesterday over fears of more aggressive rate hikes from the Fed.


The owner of Regal Cinemas confirmed that they are considering filing for bankruptcy but promised "business as usual" as they try to shore up their finances.  British company Cineworld Group said in a statement that a "voluntary Chapter 11 filing in the United States" was one of the options it was reviewing in an attempt to reduce their debt burden.  Meanwhile, Cineworld and Regal theaters were open for "business as usual," and would remain so.  Shares in Cineworld crashed as much as 80% in London on Friday after the Wall Street Journal reported that the world's second largest movie theater chain had spoken to lawyers to advise on the bankruptcy process in the United States and United Kingdom.  The company's stock fell another 20% yesterday. The news also contributed to a plunge of more than 40% in the shares of AMC, the world's largest movie theater chain.


Ford Motor’s is cutting about 3,000 jobs from their global workforce, as the automaker attempts to lower costs as part of restructuring efforts under CEO Jim Farley.  Ford’s cost-cutting actions are the latest in a series of efforts by companies to reduce expense and employee head count amid fears of a potential recession or economic softening, with inflation hovering near a 40-year high.


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Stocks tumbled on Friday as Wall Street’s summer rally faltered and rate hike fears resurfaced, leading the major averages to end the week lower. Friday’s halt in Wall Street’s summer rally came as minutes from the Federal Reserve’s July meeting and comments from St. Louis Federal Reserve President James Bullard indicated that the central bank would likely continue hiking rates in the near term, putting a damper on investors’ hopes of a slowdown in rate hikes.

 The Conference Board’s Index of Leading Economic Indicators (LEI) was negative again in July, that’s five months in a row. The economy has never escaped Recession when this has occurred.  Retail Sales showed no growth in July (+0.8% growth in June). Of interest, ex-auto, July Retail Sales were +0.4% M/M. That means, just when supply chains have eased and automakers can once again get the chips they need, auto demand seems to have diminished.
Existing-home sales sagged for the sixth straight month in July, according to the National Association of REALTORS®. All four major U.S. regions recorded month-over-month and year-over-year sales declines.  Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, slipped 5.9% from June to a seasonally adjusted annual rate of 4.81 million in July. Year-over-year, sales fell 20.2%.

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This week's housing data did much to confirm a slowdown sought by the Federal Reserve. Along with what may have been peak inflation last week, cooler housing data is another piece in the puzzle as the FOMC tightens conditions. The outlier remains the labor market, where jobless claims dropped this week and payroll growth remains strong. The August NAHB measure of homebuilder confidence fell below 50, Housing starts for July dropped 9.6%, more than expected, (although permits dropped less than forecast), And most recently the NAR reported that July existing home sales fell 5.9%, more than anticipated.

The Big Ten Conference has struck a deal for media rights to its college sports that is reportedly worth up to $7.5B, amping up an already competitive arms race in sports programming as power among colleges continues to concentrate in a few buckets. The conference reached a seven-year deal with CBS, NBC, Fox and NBCU streaming platform Peacock, and will also show sports on the Big Ten Network and Fox Sports 1. The approach resembles the NFL's stance of spreading media rights over several partners.

Applied Materials posted third-quarter results that beat expectations and issued guidance that seemed to stave off fears of a slowdown. For the period ending July 31, Applied Materials said it earned $1.94 a share, on $6.52B in revenue. Gross margins ticked down year-over-year to 46.1%.

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The US and Taiwan agreed yesterday to begin formal trade and investment talks amid flaring tensions between Washington and Beijing over the self-governing island that China claims as its own. The discussions stem from a joint initiative announced in June and are expected to begin in the early autumn. They are aimed at deepening economic engagement in areas including agriculture, digital trade and climate.

Based on their latest meeting minutes, Federal Reserve officials are predicting a slowdown in the housing market. There have been conflicting signals: Home sales have slowed, while housing prices remain high. But a mere slowdown is unlikely to stop the Fed in its crusade to crush inflation, which has led to an increase in interest rates, putting pressure on mortgage rates. A report from Fitch this week said that the Fed’s interest-rate moves had indeed made housing prices more likely to fall, and reasoned a plausible drop to be around 15 percent.

Apple is looking at holding its annual fall product event, including the announcement of its iPhone 14 product line, on Sept. 7, according to a Bloomberg report.

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Rising costs and falling confidence in the U.S. economy are fast becoming a toxic cocktail for the housing market. As a result, a growing number of buyers are backing out of deals they’ve made with homebuilders and sellers of existing homes.  Homebuilder cancellation rates have more than doubled since April. In July, 17.6% of builder contracts fell through, compared with 8% in April and 7.5% in July 2021.

Production at U.S. factories increased more than expected in July as output rose at motor vehicle plants and elsewhere, pointing to underlying strength in manufacturing despite ebbing business confidence.  Manufacturing output rebounded 0.7% last month after declining 0.4% in June.  Manufacturing, which accounts for 11.9% of the U.S. economy, remains supported by strong demand for goods even as spending is gradually shifting back to services. But risks are rising, with retailers sitting on excess inventory, especially of apparel.

Target said their quarterly profit fell nearly 90% from a year ago, as the retailer followed through on their warning that steep markdowns on unwanted merchandise would weigh on its bottom line.  The big-box retailer missed Wall Street’s expectations by a wide margin, even after the company itself lowered guidance twice.


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The retail sector is in the spotlight this week with big reports due in from Walmart and Target. Both Walmart and Target saw big inventory builds during the first quarter and warned of a fall in earnings this year as consumers increasingly shopped for lower-margin goods such as food and fuel. Since the major retailers last reported quarterly results, prices shoppers pay for a variety of goods and services have shown signs of cooling following a relentless rise

China reported data for July that came in well below expectations as the real estate slump and Covid controls dragged down growth.  Industrial production, retail sales, and home prices all dramatically missed expectations. 

Saudi Aramco CEO Amin Nasser said on Sunday it is ready to raise crude oil production to its maximum capacity of 12M bbl/day if asked to do so by the Saudi government. The comments came as Aramco reported a 90% surge in Q2 profit to a stronger than expected $48.4B, the state oil company's highest quarterly net profit since it started trading shares on the Saudi stock exchange in 2019


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The number of Americans who signed up for unemployment benefits rose last week to the highest level since November, though the U.S. job market continues to show signs of strength.  Applications for jobless aid climbed by 14,000 to 262,000 and have now risen five out of the last six weeks. The four-week average for claims, which smooths out weekly ups and downs, rose to 252,000, also the highest since November.  The number of Americans collecting traditional unemployment benefits increased to 1.43 million in the last week of July — the highest number since early April.

Despite inflation cooling down a bit in July, up 8.5%, Americans are still paying significantly more for food.  According to the Bureau of Labor Statistics, the cost of food rose 10.9% , with food in the at-home category rising 13.1%. For the overall food category, that's the highest increase since May of 1979.

The cost of your blended Blue Rebel and oat milk Cocomo is going up, but Oregon drive-thru chain Dutch Bros said that higher prices are preserving its profitability and growth.  Dutch Bros, based in Grants Pass, shocked investors by announcing that inflation was cutting into customer demand and increasing the company’s own operating costs. Even so the company reported that 2nd quarter revenue rose 44% from a year ago sending the stock sharply higher.


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Producer prices, which measures wholesale prices paid by companies and could be viewed as a leading indicator of future consumer inflation, decreased by .5% in July from the prior month. The July decline was largely due to falling gasoline prices.  Even though prices declined month to month they were still 9.8% higher than last year at this time.

If Disney+’s subscriber growth is any indication, the rumors that the global streaming market is nearing saturation have been proven untrue.  The Walt Disney Company reported that total Disney+ subscriptions rose to 152 million during the fiscal third quarter, higher than the 147 million analysts had forecast.  Disney also posted better-than-expected earnings on both the top and bottom line, bolstered by increased spending at its domestic theme parks.  Shares of the stock are higher on the news.

New government data points to signs that red-hot inflation is starting to cool. But Social Security beneficiaries may still be in for a record high cost-of-living adjustment in 2023.  The Senior Citizens League, a nonpartisan senior group, now estimates Social Security benefits may increase 9.6%, based on Consumer Price Index data released Wednesday.  That would amount to an extra $158.98 per month for the average retiree benefit of $1,656, according to the group’s calculations.


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Prices that consumers pay for a variety of goods and services rose 8.5% in July from a year ago, a slowing pace from the previous month due largely to a drop in gasoline prices.  On a monthly basis, prices were flat as energy prices broadly declined 4.6% and gasoline fell 7.7%. That offset a 1.1% monthly gain in food prices and a 0.5% increase in shelter costs.

U.S. worker productivity in the second quarter fell at its steepest pace on an annual basis since 1948, according to the Labor Department, while growth in unit labor costs accelerated, suggesting strong wage pressures will continue to help keep inflation elevated.  Nonfarm productivity, which measures hourly output per worker, fell at 2.5% pace from a year ago. It also declined sharply in the second quarter at a 4.6% annualized rate, after having declined by an upwardly revised 7.4% in the first three months of the year.

The NFIB’s Small Business Optimism Index rose 0.4 points in July to 89.9, however, it is the sixth consecutive month below the 48-year average of 98. Thirty-seven percent of small business owners reported that inflation was their single most important problem in operating their business, an increase of three points from June and the highest level since the fourth quarter of 1979.


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The consumer outlook for inflation decreased significantly in July amid a sharp drop in gas prices and a growing belief that the rapid surges in food and housing also would ebb in the future.  The New York Federal Reserve’s monthly Survey of Consumer Expectations showed that respondents expect inflation to run at a 6.2% pace over the next year and a 3.2% rate for the next three years.  While those numbers are still very high by historical standards, they mark a big drop-off from the respective 6.8% and 3.6% results from the June survey.

U.S. mortgage rates are tumbling even after the Federal Reserve hiked its benchmark interest rate by 75 basis points last week.  In fact, the average rate on a 30-year fixed mortgage has dipped below 5% for the first time since early April, a new report shows.  This is still significantly higher than last year — and the combination of high prices and interest rates is driving a reset in fundamentals.  With borrowing costs setting an affordability ceiling for many buyers, home sales are dropping.

The chip giant Nvidia announced weaker-than-expected revenue for the second quarter, putting pressure on semiconductor stocks. Shares of the chip giant fell more than 6%, and rival stocks like AMD and Broadcom were also under pressure.


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