Posts Tagged ‘U.S. economy’

U.S. Message to China: Hands Off Our Companies

July 22, 2017

Backers of several high-profile transactions have failed to get approval amid tougher scrutiny of Chinese investment

CFIUS hasn’t green-lighted a deal by Jack Ma’s Ant Financial to buy MoneyGram International for $1.2 billion.
CFIUS hasn’t green-lighted a deal by Jack Ma’s Ant Financial to buy MoneyGram International for $1.2 billion. PHOTO: WANGPING/ZUMA PRESS

The U.S. is toughening its scrutiny of Chinese deals, throwing a number of high-profile takeover bids into question and helping spur a huge case backlog, according to people familiar with the process.

The Committee on Foreign Investment in the U.S. has signaled there are significant obstacles facing the proposed $1.2 billion purchase of Dallas-based payments firm  MoneyGram International Inc. MGI -1.66% by Ant Financial Services Group, controlled by Chinese billionaire and Alibaba Group Holding Ltd. BABA -0.14% co-founder Jack Ma, some of the people said.

The committee, known as CFIUS, didn’t green-light the deal by a recent deadline, the people said. Ant refiled its application, and Mr. Ma has continued a charm campaign that included a meeting Tuesday with 20 U.S. and Chinese executives at the U.S. Department of Commerce.

The backers of at least four other Chinese deals have recently refiled or said they would refile applications to the committee after failing to get approval within the roughly two-and-a-half-month review period, according to public disclosures.

At least two of them have taken the unusual step of refiling twice to try to address the committee’s concerns— China Oceanwide Holdings Group Co., which last year announced a $2.7 billion takeover of Richmond, Va.-based insurer Genworth Financial Inc., and Chinese-government backed Canyon Bridge Capital Partners, which last year announced a $1.3 billion plan to take over Portland, Ore.-based Lattice Semiconductor Corp.

Though refiled deals can still be approved, delays can be symptomatic of committee concerns, said people familiar with the process. At least one smaller Chinese deal to buy a U.S. Wi-Fi hotspot business collapsed last month after failing three times to get approval.

Reviews are stretching on for many deals, including one by Chinese conglomerate HNA Group Co. to buy a controlling stake in hedge-fund investing firm SkyBridge Capital from financier Anthony Scaramucci, who on Friday was named White House communications director. People involved in the CFIUS process say many of their deals are facing monthslong delays.

Deal makers say CFIUS—a multiagency committee led by the U.S. Treasury whose task is to screen foreign investments for national-security concerns—is growing increasingly wary of Chinese companies. A recent buying spree pushed China’s announced overseas investments to a record $221 billion last year, including $66 billion in the U.S., according to Dealogic.

Critics in Congress and some government agencies say Chinese investment poses disproportionate risks to national security because it may be directed and subsidized by the government of China, a chief U.S. rival both economically and militarily.

The concerns began growing under the previous administration as investment surged, with then-President Barack Obama taking the rare step of blocking a Chinese technology deal on his way out of office, and have only continued to intensify during the current administration.

Lawmakers and the Treasury are considering changes to the review process that could further tighten scrutiny on Chinese investment. Chinese deal makers are battling similar concerns from European regulators as well.

Rising trade tensions between China and the U.S. also could be contributing to increased hesitation by the committee, lawyers and bankers say. High-level trade talks between the two countries ended Wednesday without any concrete agreements, and President Donald Trump has said he would consider leveraging trade to get China’s help reining in North Korea.

“A deal that might not otherwise raise much concern could raise serious concern if it’s being done by a Chinese company,” said Peter Alfano, a lawyer at Squire Patton Boggs who maintains a database of publicly disclosed CFIUS activity.

The committee is also receiving record numbers of filings while still lacking key personnel, including political appointees, as well as clear direction from Mr. Trump. Career professionals see no reason to risk recommending a Chinese deal that could later prompt the ire of administration officials or members of Congress, say people familiar with the process.

A Treasury spokesman said: “The Treasury is fully engaged in the CFIUS process and provides guidance and discusses the issues with the capable career staff whose job it is to protect national security.”

John Reynolds, a partner at Davis Polk & Wardwell LLP, a law firm that handles CFIUS cases, estimates the committee is on track to review more than 250 cases this year, versus around 170 in 2016 and more than 150 in 2015. Chinese deals are expected to comprise about 30% of the committee’s reviews this year versus a typical maximum of around 10% in the past, estimates another person familiar with the process.

Reviews take a maximum of 75 days, including an investigative period in which the committee may ask for more information. If companies don’t get approval in that period, they can tweak their deals to address concerns and refile their submissions. Preliminary discussions with the committee are dragging on too, lasting as long as six weeks, said a person familiar with the process.

For the Ant and China Oceanwide deals, the committee is concerned about the prospect of giving Chinese companies access to Americans’ personal data, said people familiar with the discussions. In the past, the committee likely would have approved such deals without much disruption, but it has grown more sensitive to personal data issues after a cyberattack on the U.S. Office of Personnel Management that U.S. intelligence said in 2015 they suspected China was behind, these people said. China has denied the accusation.

Ant and MoneyGram officials have said MoneyGram would continue storing what little personal data it collects at a secure facility in Minneapolis.

Most sensitive are Chinese investments in technology, particularly semiconductors—seen by the U.S. as a potential economic and military threat. In December, Mr. Obama nixed the purchase of German semiconductor-equipment supplier Aixtron SE by a Chinese investment fund, following an investigation by CFIUS, which was looking into the deal because Aixtron has U.S. assets.

That doesn’t bode well for Canyon Bridge’s deal for Lattice, even though Lattice has said it doesn’t make military-grade technology. After recently failing again to win CFIUS approval, the companies discussed taking the deal to Mr. Trump to test his views on Chinese investment, according to people familiar with the matter. They ultimately decided to refile their application.

Write to Julie Steinberg at julie.steinberg@wsj.com

https://www.wsj.com/articles/u-s-puts-chinese-deals-on-ice-1500664800?mod=e2fb

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Trade talks fizzle as China rebuffs key Trump team demand

The Washington Post

 July 19

U.S. officials fell short of securing ambitious gains in trade with China in a meeting Wednesday and news conferences planned to cap off the event were canceled as the two countries wrapped up 100 days of trade talks.

The United States unsuccessfully pressed China to make a substantial commitment to cut its steel production, according to people with knowledge of the matter, who spoke on the condition of anonymity to comment on private discussions. U.S. officials also asked China to do more to reduce its trade surplus with the United States and open its market for agriculture, financial services and data flows, the people said.

In a terse statement released after the talks, the Treasury Department said that China had “acknowledged our shared objective to reduce the trade deficit which both sides will work cooperatively to achieve.” It also pointed to earlier-announced agreements on issues including credit ratings, electronic payments, liquefied natural gas and American beef.

The Treasury and Commerce departments did not provide further comment, while the Chinese Embassy did not respond to a request for comment.

One of the few bright spots of the session was that, when Ross pressed the Chinese, they acknowledged the need to reduce the U.S. trade deficit and declared it to be a mutual goal, said an administration source familiar with the negotiations, who spoke anonymously to discuss them candidly.

The Trump administration is considering imposing tariffs or other restrictions on imports of steel and aluminum, on the grounds that China has unfairly flooded the global market with these commodities and made U.S. producers unable to compete. Analysts say the tariffs could come within days.

In a closed-door meeting with the Senate Finance Committee last week, Commerce Secretary Wilbur Ross said the administration hoped that the threat of harsh action would bring other countries to the negotiating table, according to people who attended the meeting.

In a stern speech that kicked off Wednesday’s talks, Ross pointed out that China accounts for nearly half of the U.S. trade deficit in goods and called for rebalancing the relationship.

“As President Trump has made clear at Mar-a-Lago, the fundamental asymmetry in our trade relationship and market access must be addressed. We must create more balance in our trade by increasing exports of made-in-America goods to China,” Ross said.

At a nearby event highlighting products made in America — the theme the White House had chosen for the week —President Trump pledged to “crack down on foreign countries that cheat.”

Read the rest:

https://www.washingtonpost.com/news/wonk/wp/2017/07/19/u-s-unsuccessfully-presses-china-on-ambitious-steel-cuts-in-trade-talks/?utm_term=.e07296d7bc20

Sword of Damocles hangs over Wall Street but may not drop yet

July 20, 2017

By AMBROSE EVANS-PRITCHARD

The Shiller P/E ratio of Wall Street stocks is exactly where it was on the day of the 1929 crash, but that means nothing without a catalyst CREDIT: BRITANNICA

Global economic expansions do not die of old age. Outside war or violent energy shocks they are invariably murdered by central banks fearing inflation.

The fact that the post-Lehman business cycle in the US is already the third longest since the mid-19th Century tells us little. More relevant is that inflation is nowhere to be seen. The core PCE measure has been falling relentlessly this year and is back to 1.4pc.

The US future inflation gauge published by the Economic Cycle Research Institute has also rolled over and this underlying indicator – based on the seminal work of Geoffrey H. Moore – suggests that it will stay low for a long time. The US has turned Japanese.

Goldilocks growth that is neither too hot nor too cold might well continue for another two years or more, even though the Shiller CAPE price-to-earnings ratio of Wall Street equities has reached a vertiginous 30.12.

Americans Feel Good About the Economy, Not So Good About Trump

July 17, 2017

By John McCormick
Bloomberg

July 17, 2017, 4:00 AM EDT
  • Just 40 percent approve of president’s performance in office
  • Narrow majority expect stock market to be higher by year’s end
Traders pass in front of an American flag displayed outside of the New York Stock Exchange (NYSE) in New York.

 Photographer: Michael Nagle/Bloomberg

Almost six months into Donald Trump’s presidency, Americans are feeling fairly optimistic about their jobs, the strength of the U.S. economy, and their own fortunes. That should be welcome news for the president, except for one thing: The public’s confidence largely appears to be in spite of Trump, not because of him.

The latest Bloomberg National Poll shows 58 percent of Americans believe they’re moving closer to realizing their own career and financial aspirations, tied for the highest recorded in the poll since the question was first asked in February 2013.

A majority expect the U.S. stock market to be higher by the end of this year, while 30 percent anticipate a decline. Yet they don’t necessarily think Trump deserves credit for rising markets and falling unemployment.

Just 40 percent of Americans approve of the job he is doing in the White House, and 55 percent now view him unfavorably, up 12 points since December. Sixty-one percent say the nation is headed down the wrong path, also up 12 points since December.

Trump scored his best numbers on his handling of the economy, but even there the news for him isn’t great. Less than half of Americans — 46 percent — approve of Trump’s performance on the economy; 44 percent disapprove. He gets slightly better marks for job creation, with 47 percent approving.

“If you take the president’s scores out of this poll, you see a nation increasingly happy about the economy,” said pollster J. Ann Selzer, who oversaw the survey. “When Trump’s name is mentioned, the clouds gather.”

In nearly every measure of his performance, the poll indicates that Trump’s tumultuous presidency is not wearing well with the public. A 56 percent majority say they’re more pessimistic about Trump because of his statements and actions since the election. That’s a huge swing since December when 55 percent said his statements and actions made them more optimistic about him.

Read the poll questions and methodology here.

The public has grown more skeptical that Trump will deliver on some of his most ambitious campaign promises. Two-thirds don’t think he’ll succeed in building a wall along the Mexican border during his first term. More than half say he won’t be able to revive the coal industry.

A majority — 54 percent — believe Trump will manage to create trade deals more beneficial to the U.S., but that’s down from 66 percent in December. There’s division on whether he’ll be able to bring a substantial number of jobs back to America, or significantly reform the tax code.

And despite his assurances that he and congressional Republicans will repeal Obamacare and replace it with a “beautiful” new health care bill, 64 percent of Americans say they disapprove of his handling of the issue. That’s especially significant because health care topped unemployment, terrorism and immigration as the issue poll respondents chose as the most important challenge facing the nation right now.

There are at least two areas where Americans say they believe Trump will deliver: Almost two-thirds say he will make significant cuts in government regulation, though it’s not clear whether most think that’s a good or bad thing. Likewise, 53 percent believe he will succeed in deporting millions of immigrants living in the U.S. illegally.

The public is also skeptical about Trump’s abilities as a world leader, with 58 percent saying they disapprove of the way he handles relations with other countries and 46 percent disappointed in his actions on trade agreements.

Americans are more pessimistic about foreign policy than they were in December. Fifty-five percent now say they expect dealings with Germany to get worse during the next four years, up 22 points. The share of poll respondents who anticipate worsening relations with the U.K., Mexico, Cuba and Russia also increased by double digits.

The public is also wary of Trump’s motives in his negotiations with other countries. Just 24 percent said they were “very confident” that Trump puts the nation’s interests ahead of his businesses or family when dealing with foreign leaders.

Americans have plenty of other worries about the world. Majorities believe it’s realistic that terrorists will launch a major attack on U.S. soil (68 percent) and that North Korea will launch a nuclear weapon aimed at the U.S. (55 percent).

Trump has called the expanding investigations into possible connections between his presidential campaign and Russia a “witch hunt.” But the public isn’t necessarily taking his side. Since the president’s decision to oust former FBI Director James Comey, the Federal Bureau of Investigation’s standing has improved. It’s now viewed favorably by 68 percent, up 10 points since December. Comey is viewed positively by 43 percent, while 36 percent see him negatively.

Meanwhile, most Americans don’t share the president’s apparent soft spot for Vladimir Putin: 65 percent view the Russian president negatively — and 53 percent say it’s realistic to think Russian hacking will disrupt future U.S. elections.

There is one notable bright spot for Trump. Though views of the White House as an institution are at the lowest level ever recorded by the poll — with 48 percent now viewing it unfavorably, up 21 points since December — Trump’s voters are still sticking with him. Among those who cast ballots for him, 89 percent still say he’s doing a good job.

The telephone poll of 1,001 American adults has a margin of error of plus or minus 3.1 percentage points, higher among subgroups. It was conducted July 8-12 by Iowa-based Selzer & Co.

https://www.bloomberg.com/news/articles/2017-07-17/americans-feel-good-about-the-economy-not-so-good-about-trump-j57v0var

Optimism in Financial Markets Fails to Show in Real Economy

July 15, 2017

“Hopes for a prolonged period of 3% GDP growth sparked by Trump’s victory have largely vanished.”

Image may contain: 1 person, standing

By Ben Leubsdorf

The Wall Street Journal
July 14, 2017 3:08 p.m. ET

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Optimism in financial markets isn’t showing up in the real economy.

Though stocks have been hitting records and big U.S. banks reported stronger-than-expected earnings Friday, consumers pulled back their spending at midyear and became less optimistic about the future, while inflation on consumer purchases softened.

Taken together, the indicators pointed to an economy that is entering the ninth year of expansion steady and still creating jobs at a healthy clip, but without obvious additional momentum. President Donald Trump has set out an agenda to push economic growth beyond the 2% pace that has prevailed since the recession ended in 2009, but so far there is little sign of a real breakout happening.

Modest price pressures are a possible sign of slower underlying economic momentum and a headache for the Federal Reserve, which has struggled to reach its 2% annual inflation goal since the 2007-09 recession.

“To be sure, the data do not suggest an impending recession,” said Richard Curtin, chief economist for the University of Michigan’s consumer-sentiment survey. “Rather, the data indicate that hopes for a prolonged period of 3% GDP growth sparked by Trump’s victory have largely vanished, aside from a temporary snapback expected in the second quarter.”

On the positive side, factory output picked up in June, and domestic energy production is rebounding. Overall economic activity appeared to accelerate in the second quarter following a weak start to 2017, when gross domestic product expanded at a 1.4% annual rate during the first quarter.

For the recently ended second quarter, forecasting firm Macroeconomic Advisers on Friday projected 2.3% growth and the Federal Reserve Bank of Atlanta’s high-profile GDPNow model predicted a 2.4% growth pace.

Reports on Friday offered fresh insights into the state of the economy, a broadly healthy picture with some downbeat signals headed into the second half of 2017.

Several of the biggest U.S. banks released mixed reports that, while showing stronger-than-expected earnings, sent their shares lower.

J.P. Morgan Chase & Co., the largest U.S. bank by assets, reported record quarterly profit of $7.03 billion. But it also trimmed forecasts for growth in loans and net interest income.

Wells Fargo & Co. reported a $6.7 billion decline in average loans from the first quarter. The company’s chief financial officer, John Shrewsberry, noted “softness across the industry,” but also cited specific actions the bank has taken “primarily driven by our own risk discipline which have caused our growth to slow.”

The bank has pulled back, for example, in auto lending, part of an $11.1 billion drop in the San Francisco bank’s consumer loan portfolio from a year earlier.

Retail sales — a gauge of consumer spending at stores, restaurants and websites — decreased a seasonally adjusted 0.2% in June after falling 0.1% in May, the Commerce Department said. It was the first back-to-back sales drop since July and August 2016.

Sales excluding motor vehicles and gasoline fell 0.1% last month, the first decline for the measure in almost a year.

In the second quarter, total retail sales were up just 0.2% from the first three months of the year. But more broadly, sales rose 3.9% in the first half of 2017 compared with the year-earlier period.

Fed Chairwoman Janet Yellen told lawmakers this past week that growth in household outlays “continues to be supported by job gains, rising household wealth and favorable consumer sentiment.”

But the University of Michigan’s sentiment gauge dropped in July for the second straight month, with a preliminary July reading of 93.1 versus 95.1 in June and 97.1 in May. The decline was driven by weaker expectations for future economic gains, though the overall index was still 3.4% higher in June from a year earlier.

On inflation, the Labor Department said its consumer-price index was unchanged in June from the prior month. Excluding the often-volatile categories of food and energy, so-called core prices rose just 0.1% for the third straight month.

On an annual basis, overall inflation softened to a 1.6% annual gain in June, while core inflation was steady at 1.7% annual growth.

The Fed is tasked with achieving maximum sustainable employment and stable prices. With unemployment at 4.4% in June, it appears the Fed has closed in on half of its mandate. Inflation, however, remains well shy of its 2% target.

The Fed’s preferred inflation gauge, the Commerce Department’s price index for personal-consumption expenditures, poked above the central bank’s 2% goal in February for the first time in nearly five years. It has settled lower each month since. The most recent data, for May, showed a 1.4% year-to-year gain.

“We’re starting to see some signs of cyclical weakness,” said Laura Rosner, senior economist at research firm MacroPolicy Perspectives. She said recent soft inflation data “really raise questions about whether we will get to 2% on a sustained basis before the next recession, and I think that raises very thorny questions for the Fed.”

The Fed has penciled in one more increase for short-term interest rates this year, and also plans to begin shrinking its $4.5 trillion asset portfolio. Continued soft readings on core inflation could damp enthusiasm for higher rates, though Ms. Yellen has said she expects the current weakness will prove transitory and inflation will firm alongside a tightening labor market.

Speaking in Mexico City on Friday, Federal Reserve Bank of Dallas President Robert Kaplan reiterated he would like to see more evidence that inflation is moving toward the 2% target. The Fed’s policy-making committee is expected to remain on hold at its July 25-26 meeting, but Mr. Kaplan said the Fed should begin the process of shrinking its balance sheet “very soon,” as early as the U.S. central bank’s September policy meeting.

The industrial side of the economy looked a bit stronger last month. Industrial output — a measure of production by manufacturers, mining companies and utilities — grew 0.4% in June from May, the Fed said. Production rose 2% over the past year.

The rebound has been driven by mining output, which grew 1.6% in June and has risen nearly 10% over the past year as energy companies boost oil and gas extraction. Growth in manufacturing output has been more modest, with factory production climbing 0.2% in June and up 1.2% on the year

–Aaron Lucchetti, Jeffrey Sparshott, Josh Mitchell, Josh Zumbrun and Anthony Harrup contributed to this article.

Write to Ben Leubsdorf at ben.leubsdorf@wsj.com

https://www.wsj.com/articles/optimism-in-financial-markets-fails-to-show-in-real-economy-1500059325

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US job creation surges in June, pointing to market’s resilience

July 7, 2017

A UPS worker makes deliveries in Lower Manhattan. About 100,000 new jobs are needed each month to keep up with population growth. Credit Drew Angerer/Getty Images

WASHINGTON (AFP) – 

US job creation returned with a roar in June, offering a dose of welcome news to the White House and offsetting fears of a slowing economy, official figures showed Friday.

Still, the robust employment report came amid persistently sluggish wage gains while the jobless rate ticked higher — with more people returning from the sidelines to search for work, according to the Labor Department.

The US economic engine created another 222,000 jobs last month, far surpassing an analyst forecast for 173,000 net new positions, while the jobless rate rose a tenth of a point to 4.4 percent, according to the report.

The result came after several months in which other economic data suggested the world’s largest economy could be starting to lose steam. The jobs rebound also was sure to comfort Federal Reserve policymakers planning to hike benchmark interest rates later this year despite persistently weak inflation.

Gains in pay, however, were a disappointment and could fuel disagreements among Fed policymakers about the dangers of inflation.

Average hourly earnings rose four cents to $26.25, up 2.5 percent over June of last year — the same annual gain reported in May and just ahead of inflation.

The report revised May’s comparatively somber report, adding a net 47,000 jobs to the totals for that month and to April.

“The trend in employment growth remains more than strong enough to keep the unemployment rate trending down, which we expect will add to upward pressure on wages,” said Jim O’Sullivan of High Frequency Economics.

“That said, for now, the wage data are tame enough to keep the debate about the relationship between slack and inflation very much alive.”

The labor force participation rate rose a tenth of a point to 62.8 percent, at a time when many US students and new college graduates began hunting for summer work. As more workers begin looking for jobs, that can push the unemployment rate higher.

– Rising employment for African-Americans –

Job gains were seen in healthcare, which added 37,000 new positions, financial services, which rose 17,000, and mining, which increased by 8,000 amid a modest recovery in the oil and gas sector since last summer.

The report brought monthly job creation so far this year to an average of 180,000, a little lower than the average of 187,000 recorded last year.

Nariman Behravesh of IHS Markit said the report overstated some of the vigor in the jobs market, since an important part of June’s jump was due to a seasonal upswing in hiring by state and local governments — something that can also be tied to the end of the school year.

Still, he said, “the continued vitality in the US labor market means that the Fed is on track to begin shrinking its balance sheet in September and to raise rates again in December.”

The manufacturing sector — key to President Donald Trump’s pledge to revive the economy — was little changed, adding just 1,000 new positions after losing twice as many the month before.

New positions among autoworkers fell by 1,300 in a sector that has seen sales dwindle after the record pace of 2016.

The share of people out of work but who had been seeking a job for fewer than 26 weeks dropped sharply, falling 18 percent to 948,000. But the ranks of the long-term unemployed edged up by 1,000 to 1.7 million.

Elise Gould of the Economic Policy Institute noted that among worker groups the jobs report contained good news for African-Americans, for whom the jobless rate has tumbled to 7.1 percent, down 1.5 points from the same month last year.

“While the unemployment rates for workers of color remain far higher than for white non-Hispanic workers, the black unemployment rate has been falling faster than overall unemployment over the last year,” she said in a statement.

by Douglas Gillison
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Market Watch
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Unemployment edges up to 4.4% as more people look for work

By JEFFRY BARTASH

REPORTER
Getty Images
Now hiring signs are everywhere these days. The U.S. economy created 222,000 new jobs in June, well above Wall Street’s forecast. The U.S. unemployment rate was 4.4%.

WASHINGTON (MarketWatch) — The U.S. created 222,000 new jobs in June as hiring accelerated in the spring, showing that companies are still finding ways to add staff despite a growing shortage of skilled workers.

The increase in new jobs was the largest in four months and second biggest haul of the year. Hiring was also stronger in May and April than previously reported.

The pickup in hiring in the spring coincides with a fresh spurt of growth in the economy after a slow start to the year. The U.S. is forecast to grow twice as fast in the second quarter as it did in the first three months of the year.

“The job market remains in good shape eight years into the economic expansion,” said Gus Faucher, chief economist at PNC Financial Services.

The unemployment rate, meanwhile, rose to 4.4% from 4.3% as more people entered the labor force in search of work. The jobless rate had fallen to a 16-year low in May.

Read: Concerns about a slowdown ‘premature’ — jobs report reactions

In early Friday trades, the Dow Jones Industrial Average DJIA, +0.47% rose. Employment gains in June easily surpassed the 180,000 estimate of economists polled by MarketWatch.

The ongoing improvement in the labor market is under scrutiny from a Federal Reserve that’s likely to view the strong June report as another call to action. The central bank has been raising interest rates gradually and withdrawing stimulus to ensure the economy does not overheat.

The Fed sees steady employment gains as further proof the economy has mostly healed from the Great Recession. They worry low unemployment could trigger a surge in worker play that re-ignites inflation.

As the economy enters its ninth year of expansion, however, there’s no sign of runaway wages.

Hourly pay rose a 0.2% to $26.25 an hour in June, the government said. Wages have advanced a modest 2.5% in the past 12 months, up slightly from the prior month but still well below the usual gains at this late stage of an expansion. Companies continue to find ways to restrain labor costs.

Economists have offered a variety of explanations for mild wage growth: low productivity, global competition, fewer middle-class jobs or a shift to a younger, lower-paid workforce from an older, higher-paid one.

“Wages are accelerating in some industries, just not enough industries,” wrote Steven Blitz, chief U.S. economist at TS Lombard, in a note to clients.

Virtually every industry added jobs in June.

Inside the report

In June, health care companies hired 37,000 workers. Doctor offices and hospitals have been adding employees for years to care for an aging population and to handle changes brought about by the Obamacare.

White-collar businesses also created 35,000 new jobs in what’s been another area of strong employment growth.

Restaurants padded payrolls by 29,000 in June and financial firms such as banks and insurers beefed up staff by 29,000.

Retailers under siege from online sellers found some respite, adding workers for the first time in five months.

Energy companies involved in fracking — extracting oil and gas from rock formations under dry land — also boosted hiring for the eighth straight month. The industry had suffered through a two-year stretch of heavy layoffs after oil prices collapsed

Employment in manufacturing was basically flat, however. Heavy industry has only added 53,000 jobs this year despite an economic upsurge.

“The manufacturing jobs recovery isn’t happening,” said Jed Kolko, chief economist of the job-lisitng website Indeed.

The government also raised its estimate of new jobs created in May to 152,000 from 138,000. April’s gain was increased to 207,000 from 174,000.

Under the Trump administration, employment has increased by an average of 173,000 jobs a month compared to 187,000 in the final year of the Obama White House.

http://www.marketwatch.com/story/us-adds-222000-jobs-in-june-as-hiring-surges-2017-07-07

See also:

U.S. Adds a Robust 222,000 Jobs in June

https://www.wsj.com/articles/u-s-adds-a-robust-222-000-jobs-in-june-1499430803

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Why Soaring Assets and Low Unemployment Mean It’s Time to Start Worrying

July 5, 2017

Today’s conditions expose vulnerabilities that make a recession or market meltdown more likely

Image result for janet yellen, photos

 

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Updated July 5, 2017 10:00 a.m. ET

 

If you drew up a list of preconditions for recession, it would include the following: a labor market at full strength, frothy asset prices, tightening central banks, and a pervasive sense of calm.

In other words, it would look a lot like the present.

Those of us who have lived through economic mayhem before feel our muscle memory twitch at times like this. Consider the worrisome absence of worry. “Implied volatility” measures the cost of hedging against big market moves via options. When fear is pervasive, options are expensive so implied volatility is high. At present, implied volatility in bonds, stocks, currencies and gold sits near its lowest since mid-2007, the eve of the financial crisis, according to a composite measure maintained by Variant Perception, a London-based investment advisory.

The economic expansion is now entering its ninth year and in two years will be the longest on record. The unemployment rate sits at 4.3%, the lowest in 16 years, suggesting the economy has reached, or nearly reached, full capacity.

Expansions don’t die of old age, economists like to say. On the other hand, should we really assume this one will be a record breaker? From a level this low, unemployment has more room to go up than down. Another ominous sign: Central banks are tightening monetary policy, which has preceded every recession. The Fed has raised rates three times since December and last week central banks in Britain, the eurozone and Canada all hinted that years of easy money were coming to an end.

Still, the presence of recession preconditions isn’t enough to say one is imminent. To understand implied volatility, think of hurricane insurance. Right after a storm, homeowners are more anxious to have coverage, even as insurers withdraw, which of course means premiums spike. As years go by without another hurricane, homeowners let their coverage lapse, insurers return and premiums drop. Similarly, implied volatility is low today because years without a financial calamity have sapped demand for hedging while enticing sellers with the prospect of steady income in exchange for potentially huge losses. But just as hurricane premiums don’t predict the next hurricane, low implied volatility tells us nothing about whether or when a downdraft will actually come.

Similarly, when unemployment got nearly this low in 1989 and again in 2006, a recession was about a year away; but in 1998, it was three years away, and in 1965, four years. A narrowing spread between short-term interest rates and long-term rates comparable to the present has happened 12 times since 1962, and only five times did recession follow within two years.

But if today’s conditions don’t dictate a recession or a market meltdown, they expose vulnerabilities that make either more likely in the face of some catalyzing event.

When growth is steady and interest rates are low for years, investors and businesses behave as if those conditions will last forever. That’s why even with muted economic growth, stocks are trading at a historically high 22 times the past year’s earnings. It’s also why home prices have returned to their pre-crisis peaks in major American cities. Real estate has scaled even greater heights in Australia, Canada and parts of China, which exhibit some of the same lax lending and wishful thinking that underlay the U.S. housing bubble a decade ago.

Companies meanwhile have responded to slow, stable growth and low rates by borrowing heavily, often to buy back stock or pay dividends. Corporate debt as a share of economic output is at levels last seen just before the past two recessions.

When everyone acts as if steady growth and low volatility will last forever, it guarantees they won’t. Once asset prices fall, the flow of credit that sustained them dries up, aggravating the correction. Corporate leverage is at levels that in the past led to weakening corporate bond prices and greater equity volatility, says Jonathan Tepper, founder of Variant. “A high proportion of companies won’t be able to pay back debt.” A selloff in corporate bonds and stocks could become self-reinforcing as those who insured against such a move sell into it to limit their own losses.

Of course, some things are different this time. The postcrisis regulatory crackdown means if asset prices fall, they probably won’t take banks down with them. Last week Janet Yellen, the Fed chairwoman, said she thought there wouldn’t be another financial crisis “in our lifetimes.” Fair enough: crises as catastrophic as the last happen twice a century. But small crises are inevitable as risk migrates to financial players who haven’t drawn the attention of regulators. “Elevated asset valuation pressures today may be indicative of rising vulnerabilities tomorrow,” Fed vice chairman Stanley Fischer warned last week.

Inflation is uncomfortably low rather than too high as in previous cycles, which makes it less likely central banks will have to raise interest rates sharply or rapidly. But in a world with permanently lower inflation and growth, businesses will struggle to earn their way out of debt, and interest rates will bite at lower levels than before. This confronts the Fed with a dilemma. If bond yields remain around 2% to 2.5%, the Fed may be playing with fire by pushing rates to 3%, as planned. If it backs off those plans, it could egg on excesses that make any reversal more violent.

Ms. Yellen and Mr. Fischer, both veterans of past mayhem, need to be on guard for a repeat. So should everyone else.

Write to Greg Ip at greg.ip@wsj.com

Corrections & Amplifications

This story was corrected at 10:03 a.m. ET because it misspelled the name Variant in the 11th paragraph.

If you drew up a list of preconditions for recession, it would include the following: a labor market at full strength, frothy asset prices, tightening central banks, and a pervasive sense of calm.

In other words, it would look a lot like the present.

Those of us who have lived through economic mayhem before feel our muscle memory twitch at times like this. Consider the worrisome absence of worry. “Implied volatility” measures the cost of hedging against big market moves via options. When fear is pervasive, options are expensive so implied volatility is high. At present, implied volatility in bonds, stocks, currencies and gold sits near its lowest since mid-2007, the eve of the financial crisis, according to a composite measure maintained by Variant Perception, a London-based investment advisory.

The economic expansion is now entering its ninth year and in two years will be the longest on record. The unemployment rate sits at 4.3%, the lowest in 16 years, suggesting the economy has reached, or nearly reached, full capacity.

Expansions don’t die of old age, economists like to say. On the other hand, should we really assume this one will be a record breaker? From a level this low, unemployment has more room to go up than down. Another ominous sign: Central banks are tightening monetary policy, which has preceded every recession. The Fed has raised rates three times since December and last week central banks in Britain, the eurozone and Canada all hinted that years of easy money were coming to an end.

Still, the presence of recession preconditions isn’t enough to say one is imminent. To understand implied volatility, think of hurricane insurance. Right after a storm, homeowners are more anxious to have coverage, even as insurers withdraw, which of course means premiums spike. As years go by without another hurricane, homeowners let their coverage lapse, insurers return and premiums drop. Similarly, implied volatility is low today because years without a financial calamity have sapped demand for hedging while enticing sellers with the prospect of steady income in exchange for potentially huge losses. But just as hurricane premiums don’t predict the next hurricane, low implied volatility tells us nothing about whether or when a downdraft will actually come.

Similarly, when unemployment got nearly this low in 1989 and again in 2006, a recession was about a year away; but in 1998, it was three years away, and in 1965, four years. A narrowing spread between short-term interest rates and long-term rates comparable to the present has happened 12 times since 1962, and only five times did recession follow within two years.

But if today’s conditions don’t dictate a recession or a market meltdown, they expose vulnerabilities that make either more likely in the face of some catalyzing event.

When growth is steady and interest rates are low for years, investors and businesses behave as if those conditions will last forever. That’s why even with muted economic growth, stocks are trading at a historically high 22 times the past year’s earnings. It’s also why home prices have returned to their pre-crisis peaks in major American cities. Real estate has scaled even greater heights in Australia, Canada and parts of China, which exhibit some of the same lax lending and wishful thinking that underlay the U.S. housing bubble a decade ago.

Companies meanwhile have responded to slow, stable growth and low rates by borrowing heavily, often to buy back stock or pay dividends. Corporate debt as a share of economic output is at levels last seen just before the past two recessions.

When everyone acts as if steady growth and low volatility will last forever, it guarantees they won’t. Once asset prices fall, the flow of credit that sustained them dries up, aggravating the correction. Corporate leverage is at levels that in the past led to weakening corporate bond prices and greater equity volatility, says Jonathan Tepper, founder of Variant. “A high proportion of companies won’t be able to pay back debt.” A selloff in corporate bonds and stocks could become self-reinforcing as those who insured against such a move sell into it to limit their own losses.

Of course, some things are different this time. The postcrisis regulatory crackdown means if asset prices fall, they probably won’t take banks down with them. Last week Janet Yellen, the Fed chairwoman, said she thought there wouldn’t be another financial crisis “in our lifetimes.” Fair enough: crises as catastrophic as the last happen twice a century. But small crises are inevitable as risk migrates to financial players who haven’t drawn the attention of regulators. “Elevated asset valuation pressures today may be indicative of rising vulnerabilities tomorrow,” Fed vice chairman Stanley Fischer warned last week.

Inflation is uncomfortably low rather than too high as in previous cycles, which makes it less likely central banks will have to raise interest rates sharply or rapidly. But in a world with permanently lower inflation and growth, businesses will struggle to earn their way out of debt, and interest rates will bite at lower levels than before. This confronts the Fed with a dilemma. If bond yields remain around 2% to 2.5%, the Fed may be playing with fire by pushing rates to 3%, as planned. If it backs off those plans, it could egg on excesses that make any reversal more violent.

Ms. Yellen and Mr. Fischer, both veterans of past mayhem, need to be on guard for a repeat. So should everyone else.

Write to Greg Ip at greg.ip@wsj.com

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Global Stocks Post Strongest First Half in Years, Worrying Investors

July 1, 2017

Market watchers wonder whether the strong showing heralds smooth sailing or choppy water ahead

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Updated June 30, 2017 5:18 p.m. ET

HONG KONG—Global stock markets collectively had their best opening half-year in years, a strong run capped by turbulence this week that could be a harbinger of greater volatility in the second half of the year.

All but four of the 30 major indexes representing the world’s biggest stock markets by value have risen this year, a first-half performance unmatched since 2009, according to an analysis by The Wall Street Journal. In the past 20 years, only four first-half rallies have been as widespread or better than the current global surge. Two of them preceded sharp market crashes, while two others came at the beginning of multiyear bull markets.

In the U.S., the tech-heavy Nasdaq Composite surged 14%, its best first half since 2003. The Dow Jones Industrial Average and S&P 500 each rose 8%. But the U.S. wasn’t alone. Stock benchmarks from South Korea to India to Spain were among the biggest risers over the first six months, all registering double-digit percentage gains.

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Investors attribute the breadth of the current rally to strengthening corporate earnings and improving economies, particularly in Europe, as well as continued support from central banks around the world. A resilient tech sector led by U.S. and Chinese giants has powered markets world-wide.

Despite President Donald Trump’s challenges with parts of his agenda, and political jolts in countries from Brazil to the U.K., stock markets have been unusually steady too. Measures of volatility in the year’s first half were at or near multiyear lows not only in the U.S., but also in Europe and Asia.

The question for stock investors is whether the strong first six months heralds a choppier second half or the start of a multiyear upswing. The data on global rallies offers a mixed record.

A surge in the first half of 1999 preceded the bursting of the tech bubble. The rally to start 2007 came before the global financial crisis. But broad, world-wide gains similar to this year’s also occurred in 2003 and 2009. Both of those were early stages of yearslong market rallies.

This week, investors tasted the greater uncertainty that could lie ahead, when top European Central Bank officials offered mixed messages on the future of its bond-buying program. Heads of central banks in the U.K. and Canada also indicated they were pondering when to raise interest rates.

Stocks and currencies gyrated on the concern of less central-bank accommodation, moves reminiscent of the 2013 “taper tantrum” in the U.S., touched off when the Fed signaled a reduction in asset purchases.

“Central banks have created huge distortions in the markets, which are going to be difficult to unwind,” said Colin Graham, chief investment officer of multiasset solutions at BNP Paribas Asset Management.

“But we think they are going to talk hawkish and walk dovish,” Mr. Graham continued, implying that central banks won’t do anything too drastic that risks roiling markets.

The stakes are high. In the U.S., the Dow, S&P 500 and Nasdaq Composite have set numerous records highs in the ninth year of a bull market. Globally, nearly half of the top 30 stock indexes are at or near all-time highs.

“We’re really seeing a synchronized global recovery take shape this year,” said Graeme Bencke, global portfolio manager at Pinebridge Investments in London. “Everything is looking better.”

The tech sector’s rising clout has been key. The five largest U.S. companies by market capitalization are tech- and consumer-related companies, led by Apple Inc. They propelled the Nasdaq to 38 new closing records this year, its most through the first half of a year since 1986.

China’s tech behemoths fared even better. Tencent Holdings Ltd., the world’s largest videogame publisher by revenue, and China’s largest social network, WeChat, have jumped more than 40% this year. Alibaba Group Holding Ltd., the online marketplace, surged roughly 60%, pushing the MSCI Asia Ex Japan Index up more than 20% for the year.

Even sectors that have mostly underperformed this year, such as financials, have belatedly joined in. After all major U.S. banks passed the Fed’s annual stress tests, analysts say they look attractive again. Banks including Citigroup Inc. and Bank of America Corp. said they would boost share buybacks and dividends.

Among the few losers this year were energy stocks, thanks to oil’s sharp decline. Exxon Mobil Corp. and Chevron Corp. were some of the Dow’s worst performers.

High stock valuations and tranquil trading this year have prompted concerns that investor complacency is setting in. Federal Reserve Chairwoman Janet Yellen warned that asset valuations were “somewhat rich.” The S&P 500 trades at about 18 times projected earnings over the next 12 months, around its highest level in 13 years.

One irony is that this year’s market gains have come about for different reasons than many expected in January.

Investors then hoped Donald Trump’s election victory would trigger lower taxes, less regulation and more infrastructure spending. Many believed U.S. interest rates would rise, the dollar would strengthen and oil would keep rising.

Abroad, there were worries Mr. Trump’s presidency would spark trade tensions that might hit emerging markets. A close French presidential election loomed over Europe’s prospects.

So far, though, Mr. Trump hasn’t enacted major changes to fiscal policy or taken significant protectionist measures. In France, pro-Europe Emmanuel Macron eventually romped to election victory, allaying fears about the rise of anti-European Union sentiment.

Through it all, the market’s focus has instead remained on central bankers, the pattern since the financial crisis. While the U.S. has raised short-term interest rates four times since the end of 2015, the ECB and Bank of Japan have mostly remained accommodative, helping juice asset prices. U.S. government bond yields have fallen, the dollar has weakened and oil prices have declined.

“It really has been a first half of the contrarian trade,” said Mark Tinker, head of Framlington Equities Asia at AXA Investment Managers, which has $835 billion under management.

Investors point to the pickup in earnings growth as a vital driver of global gains this year. In the U.S., first-quarter earnings from S&P 500 companies increased 14% from a year earlier, the best growth since 2011. Analysts now expect roughly double-digit profit growth this year and in 2018, according to FactSet.

Earnings in Asia-Pacific, excluding Japan, and in Europe, which had disappointed for years, also increased at a double-digit rate in the first quarter.

“Europe has gone from a headwind to a tailwind,” said Mark Matthews, head of research for Asia at Swiss private bank Julius Baer. “There was a fear that the euro was unraveling. The fear is behind us.”

Not every market has rallied. Russian stocks were among the world’s worst-performing equity markets, dropping 14%. Oil’s fall and the possibility of tighter sanctions hit stocks there after their strong surge in 2016. Indexes in Israel, China and Canada were the other rare decliners in the first half.

The tricky part now, investors say, is picking which regions will continue rallying. Bargain-hunting opportunities have been rare and fleeting. Brazilian shares tanked in May amid a fresh political scandal. But global fund flows to the country soared the week after, and the market quickly bounced back.

Meantime, comments from some investors suggest doubts are creeping in.

“We’ve never been in a period like this,” Mr. Bencke of PineBridge Investments said. “It’s like central banks are slowly pulling the rug from under your feet. My hope is they’ll move slowly, and the world will err on the side of caution.”

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IMF Lowers Forecast for U.S. Economy Amid Rising Policy Uncertainty — Growth rate will steadily fall over the next five years

June 27, 2017

The fund previously expected tax cuts, infrastructure spending would spur growth

The International Monetary Fund, in its annual review of the American economy, questioned the White House’s plan to accelerate output and said it was skeptical the administration would be able rev up the world’s largest growth engine to a sustained 3% annual rate.

The International Monetary Fund, in its annual review of the American economy, questioned the White House’s plan to accelerate output and said it was skeptical the administration would be able rev up the world’s largest growth engine to a sustained 3% annual rate. PHOTO: KIM KYUNG-HOON/REUTERS
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June 27, 2017 9:00 a.m. ET

WASHINGTON—The International Monetary Fund lowered its forecast for the U.S. economy Tuesday, saying it could no longer assume the Trump administration will be able to deliver pledged tax cuts and higher infrastructure spending.

The IMF, in its annual review of the American economy, questioned the White House’s plan to accelerate output and said it was skeptical the administration would be able rev up the world’s largest growth engine to a sustained 3% annual rate.

Instead, the fund forecasts the growth rate will steadily fall over the next five years to around 1.7%, assuming no major policy changes.

In April, the IMF said President Donald Trump’s tax-overhaul plans and spending stimulus could goose the growth rate to 2.5% next year, up from 2.3% this year. But after talks with administration officials amid still-evolving policy plans, the fund says it can no longer factor such fiscal stimulus into its forecasts. The IMF now says the economy will expand by 2.1% this year and next.

Initial optimism about the administration’s ability to get a tax revamp and infrastructure spending has faded in the face of mounting political hurdles.

Meanwhile, buoyant stock prices, one of the longest expansions in U.S. history and a precrisis jobless rate belie an economy facing considerable challenges ahead, the fund warned.

Technology is reshaping product and labor markets, but productivity growth isn’t picking up. An aging workforce is keeping a lid on labor-market expansion, a growth-sapping dynamic that may be exacerbated by more restrictive immigration policies. High government debt prevents spending-led stimulus. And a strong dollar—estimated by the IMF to be 10% to 20% over a value economic fundamentals warrant—is weighing on U.S. competitiveness.

“All in all, in our judgment, the U.S. economic model is not working as well as it could in generating broadly shared income growth,” said Alejandro Werner, head of the IMF’s Western Hemisphere department.

The Trump administration says its economic platform—including cutting corporate and income taxes, boosting infrastructure spending and reducing regulations—will push growth up to a sustained rate of 3% to 4% a year and cut unhealthy government debt levels.

The IMF disagreed, questioning whether the package as proposed will deliver the administration’s long-term growth targets, balance the budget and cut public debt.

“Even with an ideal constellation of progrowth policies, the potential growth dividend is likely to be less than that projected in the budget and will take longer to materialize,” the IMF said. International experience and U.S. history suggest a sustained acceleration in annual growth of more than one percentage point is unlikely, the IMF said.

Given the weaknesses in the economy, the fund said the Federal Reserve should aim to temporarily overshoot its 2% inflation target by gradually easing into its planned interest rate increases.

Write to Ian Talley at ian.talley@wsj.com

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Federal Reserve Expected to Deliver Rate Increase

June 14, 2017

Central bank is likely to lift its benchmark interest-rate range to between 1% and 1.25% after its meeting concludes Wednesday

Janet Yellen arrived for a Group of Seven meeting in Bari, Italy, in May. The Federal Reserve chairwoman will speak at a 2:30 p.m. EDT press conference Wednesday.

Janet Yellen arrived for a Group of Seven meeting in Bari, Italy, in May. The Federal Reserve chairwoman will speak at a 2:30 p.m. EDT press conference Wednesday. PHOTO: ALBERTO PIZZOLI/AGENCE FRANCE-PRESSE/GETTY IMAGES

The Federal Reserve is likely to raise short-term interest rates by a quarter percentage point after its two-day policy meeting concludes Wednesday, the fourth such increase since December 2015. Officials also will release new projections for the economy and interest rates, and could announce their plan for shrinking the Fed’s portfolio of Treasury and mortgage bonds. The central bank will release a statement and the forecasts at 2 p.m. EDT, and Fed Chairwoman Janet Yellen holds her quarterly press conference at 2:30 p.m. Here’s what to watch for:

The Upward Path for Interest Rates

As in previous years, the Fed and markets are at odds over the central bank’s projected path of rate increases. Fed officials in March raised their benchmark federal-funds rate to a range between 0.75% and 1%, and penciled in two more quarter-point rate rises this year. The new forecasts to be released Wednesday will show whether they are sticking to that story. Investors, though, see a nearly 50% probability that this week’s rate increase will be the last one this year, according to fed-funds futures data from CME Group . In the past, the Fed has eventually lowered its expectations to match market estimates.

Balance Sheet in the Balance

Investors will be particularly attuned to any new Fed information on its plans for shrinking its $4.5 trillion portfolio of bonds and other assets. Officials have laid out a tentative plan to slowly let those securities run off the balance sheet as they mature. It is still unclear how long and gradual the Fed will want this process to be, or when it will begin. Expect to get a few more answers Wednesday, either from the Fed statement or from Ms. Yellen during her press conference.

The New Low on Employment

How low can the unemployment rate go? In March, Fed officials anticipated it would end the year at 4.5%. It already is at 4.3% and still could fall farther. Clearly, officials are going to have to revisit their employment projections for 2017. And they could lower their 4.7% estimate for the longer-term unemployment rate, the level that signals a fully healthy labor market. If they do, it might help explain why inflation pressures have been so muted.

Inflation, the Perpetual Weakling

Inflation hit the Fed’s 2% target in February after undershooting it for nearly five years, which appeared to validate officials’ economic outlook. Since then, though, the personal-consumption expenditures price index—the Fed’s preferred gauge—sunk back to 1.7% in April. Officials say the recent drop is merely a temporary phenomenon. But what if it isn’t? Look to the statement and Ms. Yellen’s press conference for clues about the Fed’s latest thinking on sluggish price gains.

The Chairwoman’s Future

Ms. Yellen’s term as chairwoman ends next February. But her term on the Fed’s board of governors isn’t up until 2024. In the past, Fed chairmen have stepped down once their term at the helm is up to avoid upstaging their successors. Ms. Yellen hasn’t ruled out staying on if she isn’t offered a second term as chairwoman. If she does, it would give President Donald Trump one less seat to fill on the seven-member Fed board. Mr. Trump hasn’t ruled out reappointing her, but isn’t expected to do so. Ms. Yellen may give insight into her thinking during her press conference.

Write to David Harrison at david.harrison@wsj.com

https://www.wsj.com/articles/federal-reserve-expected-to-deliver-rate-increase-1497432607?mod=e2tweu

Asian Stocks Up as Investors Shrug Off Tech Rout, Eye Fed

June 13, 2017

SEOUL, South Korea — Asian stock markets were higher on Tuesday as investors brushed off a second day of big losses on Wall Street tech stocks a day before the Federal Reserve is expected to raise interest rates.

KEEPING SCORE: Japan’s Nikkei 225 was flat at 19,913.55 and South Korea’s Kospi rose 0.5 percent to 2,370.16. Hong Kong’s Hang Seng advanced 0.5 percent to 25,835.49, while the Shanghai Composite Index was up 0.4 percent to 3,151.25. Australia’s S&P/ASX 200 jumped 1.1 percent to 5,727.30. Stocks in Taiwan, Singapore and Indonesia were higher, but in the Philippines, the benchmark index fell.

ANALYST’S TAKE: “The theme remained centered on the sell-off for tech stocks at the start of the week, though Asian markets could find some relief,” said Jingyi Pan, a market strategist at IG in Singapore. “While the extent to which this decline may sustain remains uncertain at the current moment, the move has not triggered a more widespread decline.”

FED WATCH: The Federal Reserve will meet Tuesday and Wednesday, and investors expect the central bank to raise interest rates for the third time since December. Super-low unemployment, gains in factory output and other economic data pointing to a recovery in the U.S. economy have led investors to believe that the Fed will lift rates.

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WALL STREET: U.S. stocks fell again on Monday as tech stocks recorded sharp losses for a second straight day. The Standard & Poor’s 500 index dipped 0.1 percent to 2,429.39. The Dow Jones industrial average lost 0.2 percent to 21,235.67, and the Nasdaq composite dropped 0.5 percent to 6,175.46.

OIL: Benchmark U.S. crude added 18 cents to $46.26 per barrel on electronic trading in New York Mercantile Exchange. The contract added 25 cents to close at $46.08 a barrel on Monday. Brent crude, used to price international oils, added 19 cents to $48.48 per barrel in London. It closed up 14 cents at $48.29 a barrel in the previous session.

CURRENCIES: The dollar gained to 109.97 yen from 109.95, while the euro weakened to $1.119 from $1.120. The British pound slid further to $1.2654, down 0.1 percent.