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Yahoo
13 hours ago
- Business
- Yahoo
Consumer Sentiment Held Steady in May As Tariff Uncertainty Persists
The Michigan Consumer Sentiment Index improved from its mid-May preliminary reading to 52.2, matching April's results. Inflation expectations moved lower as consumers factored in President Donald Trump's move to reduce tariffs on China temporarily. While consumers felt better about the short-term economic outlook, they were more worried about wages and remained pessimistic about long-term economic freefall in sentiment leveled off in May as consumers worried less about price increases from tariffs, but still felt uneasy about the economic outlook. The final Michigan Consumer Sentiment Index for May improved slightly from the preliminary results released two weeks ago to 52.2, matching the final results from April. The reading ends four straight months of declines for the closely watched consumer survey. The improved sentiment reflected President Donald Trump's move on May 12 to temporarily reduce tariffs on China to 30% from 145%. It shadows a similar improvement in the Conference Board's Consumer Confidence report, which rose by more than 12 points in May on the temporary tariff truce. Consumers also felt a little better about inflation at the end of the month, with year-ahead expectations for price increases coming in at 6.6%, lower than the preliminary reading but higher than April's inflation expectations. Long-term inflation expectations ticked lower in the report. 'In the second half of the month, sentiment lifted and inflation expectations eased in the wake of the May 12 pause on some tariffs on goods from China,' said Joanne Hsu, director of the University of Michigan Survey of Consumers. 'With continued policy uncertainty, however, consumers continue to expect an economic slowdown to come.' Uncertainty has spread since consumers were asked about their outlook. Courts have gotten involved in tariffs, and Trump has called the tariff pause on Chinese goods into question. While expected short-term business conditions improved, likely from the pause in tariffs, they were offset by declines in consumers' current personal finances that stemmed from stagnant wages, the report said. About 64% of consumers said they expect business conditions to worsen in the year ahead, the same as last month, but more than double the 29% who expressed similar concerns six months ago. 'Consumers still expect the economy to weaken and foresee weaker business conditions and income growth as they express ongoing frustration with the cost of living,' said Oren Klachkin, financial market economist for Nationwide. 'However, the survey suggests consumer attitudes may improve if trade deals are announced and tariff uncertainty diminishes.' The report continued to show the separation between 'hard' and 'soft' data as economic indicators like retail sales remained strong despite consumers raising worries about the economy. 'While the soft data continue to cast an unfavorable light, the hard data paint a comparatively better picture,' Klachkin said. 'Developments on the tariff front will likely continue to shape consumer attitudes.' Read the original article on Investopedia Sign in to access your portfolio
Japan Times
a day ago
- Business
- Japan Times
Trump aims at Chinese students and tech in threat to truce with Xi
Just weeks after U.S. President Donald Trump declared a "total reset' with China following a trade truce in Geneva, tensions are rising again between the world's biggest economies. Trump's administration on Wednesday announced it would start revoking Chinese student visas, while also introducing new restrictions on the sales of chip design software and reportedly some jet engine parts to China. That came shortly after it sought to block Huawei from selling advanced AI chips anywhere in the world, prompting an angry rebuke from Beijing. "Geneva was positive because both sides are officially talking to each other,' said Alfredo Montufar-Helu, senior adviser to the China Center at the Conference Board. "But the negotiations didn't really deal with the core issues that are driving competition between the two sides. Chief of them all — technological dominance.' While U.S. and Chinese negotiators brought down tariffs from eye-watering levels for 90-days, they still need to hammer out a deal to rebalance trade — that took years in Trump's first term. Both sides are also in disagreement over Beijing's role in the illegal fentanyl trade, as well as rare earths and chip controls. In a sign any larger deal is a way off, Trump has yet to speak with his Chinese counterpart since returning to office, despite suggesting several times such a call was imminent. Treasury Secretary Scott Bessent said negotiations with China had stalled but he believed more would be held in the next few weeks. He added that a call between Trump and Chinese leader Xi Jinping will happen at some point. The crackdown on Chinese students — the second largest international group in the U.S. — was unveiled by Secretary of State Marco Rubio, who before taking office was twice sanctioned by Beijing. That dispelled any notion China hawks within the Trump administration are losing influence, after trade officials in Switzerland showed a preference for dealmaking with Beijing. China's Foreign Ministry called the visa policy "discriminatory' at a regular briefing in Beijing on Thursday, with spokeswomen Mao Ning saying it would "only further undermine' America's global reputation. That relatively restrained response, along with the fact officials didn't signal any retaliation, suggests Beijing is trying to avoid sending ties into another tailspin. U.S. President Donald Trump has yet to speak with his Chinese counterpart Xi Jinping since returning to office — a sign that any larger trade deal is a way off. | AFP-Jiji Still, the decision to put Chinese students under fresh scrutiny highlights the deep suspicion underpinning bilateral ties, with Republicans and Democrats alike now viewing China as a major threat to American security. For its part, Beijing has launched an anti-spying campaign that casts a wide net of suspicion on foreigners, particularly from the U.S.. John Moolenaar, chairman of the House Select Committee on the Chinese Communist Party, denied the U.S. actions were designed to target ordinary people in the Asian country. "It's the aggression of the Chinese Communist Party that we're pushing back on,' he said. Moolenaar represents U.S. lawmakers who are skeptical of China's influence in the U.S., including on campuses across the country. He accused Beijing of making Chinese students do its bidding and earlier this month co-signed a letter to Harvard University demanding information on its China links. "The end goal is to have a relationship with China that acknowledges the reality that their government is moving in a very different direction than they promised,' he added. Moolenaar got what he wanted when Trump moved to block Harvard from enrolling international students over claims the school's leadership had co-ordinated with the Communist Party. U.S. lawmakers allege the university trained members of a company sanctioned for alleged human-rights abuses. "This will only stoke misunderstanding, mistrust and even hatred between two societies,' said Wu Xinbo, director at Fudan University's Center for American Studies in Shanghai. "I'm afraid the Trump administration will come up with more crazy ideas and actions hurting China-U.S. relations.' Trump's approach contrasts sharply with Xi, who has touted people-to-people exchanges as the foundation of healthy U.S. ties. The Chinese leader in 2023 pledged to bring 50,000 young Americans to China over five years to stabilize relations. Some 16,000 American youths participated last year, according to Jing Quan, a minister at the Chinese embassy in the U.S. A Kirin 9000s chip taken from a Huawei smartphone | bloomberg While it's unclear how the latest policy will be enforced, expelling Chinese students from the U.S. threatens to reignite a flash point in ties from Trump's first term. Back then, the U.S. revoked over 1,000 visas of Chinese pupils and scholars, alleging they were stealing U.S. technology and intellectual property for China's military. In China, the hardening U.S. stance was met with disbelief and resentment on social media. "I can't believe Trump has shown us in our life time how quickly the U.S. empire is declining,' one user wrote on China's X-like Weibo platform. Creating a hostile environment for overseas students could push talent back toward China. That aligns with Beijing's ambition to bolster domestic innovation, as Xi turns high-tech manufacturing into a key growth driver for the economy. Chinese students have made critical contributions to America's technological success and scientific leadership, said Jessica Chen Weiss, the David M. Lampton professor of China studies at Johns Hopkins University's School of Advanced International Studies in Washington. During the McCarthy era of intense U.S. suspicion, leading rocket scientist Qian Xuesen was prevented from continuing his scientific career in the country, despite having co-founded NASA's jet propulsion laboratory at Caltech. That was to Beijing's benefit, Chen Weiss said: "He returned to China, where he helped develop China's ballistic missile program.'
Straits Times
a day ago
- Business
- Straits Times
US jobs market showing cracks as corporate profits post largest drop since 2020
Number of people collecting unemployment checks in mid-May was the largest in 3.5 years. PHOTO: AFP WASHINGTON - The number of Americans filing new applications for jobless benefits increased more than expected last week and the unemployment rate appeared to have picked up in May, suggesting layoffs were rising as tariffs cloud the economic outlook. The report from the Labor Department on May 29 showed a surge in applications in Michigan, the nation's motor vehicle assembly hub. The automobile industry has been hit with a 25 per cent duty on parts. The number of people collecting unemployment checks in mid-May was the largest in 3.5 years. Initial claims for state unemployment benefits rose 14,000 to a seasonally adjusted 240,000 for the week ended May 24, the Labor Department said. Economists polled by Reuters had forecast 230,000 claims for the latest week. They said Mr Trump's aggressive trade policy was making it harder for businesses to plan ahead, a sentiment echoed by a Conference Board survey on May 29, which showed confidence among chief executive officers plummeting in the second quarter. The dimming economic outlook was reinforced by other data showing corporate profits declining by the most in more than four years in the first quarter, pulled down by nonfinancial domestic industries. A US trade court on May 28 blocked most of President Donald Trump's tariffs from going into effect in a sweeping ruling that the president overstepped his authority. They were temporarily reinstated by a federal appeals court on May 29, adding another layer of uncertainty over the economy. 'This is a sign that cracks are starting to form in the economy and that the outlook is deteriorating,' said Christopher Rupkey, chief economist at FWDBONDS. 'There is nothing great about today's jobless claims data and the jump in layoffs may be a harbinger of worse things to come.' Despite the rise in claims, worker hoarding by employers following difficulties finding labour during and after the Covid-19 pandemic continues to underpin the jobs market. That was corroborated by the Conference Board survey, which also showed most captains of business anticipated no change in the size of their workforce over the next year even as about 83 per cent said they expected a recession in the next 12-18 months. Nonetheless, layoffs are creeping up. A report from the Bank of America Institute noted a sharp rise in higher-income households receiving unemployment benefits between February and April compared to the same period last year. Its analysis of Bank of America deposit accounts also showed notable rises among lower-income as well as middle-income households in April from the same period a year ago. Continuing claims covered the period during which the government surveyed households for May's unemployment rate. They increased between the April and May survey periods, suggesting an uptick in the unemployment rate this month. 'This raises the risk that the unemployment rate could tick up to 4.3 per cent in the May employment report,' said Abiel Reinhart, an economist at JP Morgan. The jobless rate was at 4.2 per cent in April. Many people who have lost their jobs are experiencing long spells of unemployment. With profits slowing, there is probably little incentive for businesses to boost hiring. Profits from current production with inventory valuation and capital consumption adjustments dropped US$118.1 billion (S$151.9 billion)in the first quarter, the biggest decline since the fourth quarter of 2020, the Commerce Department's Bureau of Economic Analysis (BEA) said in a separate report. Profits surged US$204.7 billion in the October-December quarter. Profits from domestic nonfinancial firms dropped US$96.7 billion. Companies ranging from airlines and retailers to motor vehicle manufacturers have either withdrawn or refrained from giving financial guidance for 2025, citing tariffs uncertainty. US companies front-loaded imports, resulting in a record trade deficit that contributed to gross domestic product declining at a 0.2 per cent annualised rate in the January-March quarter, the BEA's second estimate of GDP showed. Some of the imports ended up as inventory in warehouses, with growth in consumer spending downgraded to a 1.2 per cent rate from the initially reported 1.8 per cent pace. The economy was initially estimated to have contracted at a 0.3 per cent pace in the first quarter of 2025. It grew at a 2.4 per cent rate in the fourth quarter of 2024. 'GDP will likely either contract again in the second quarter or hold in low gear, but the economy is unlikely to slip into recession,' said Bill Adams, chief economist at Comerica Bank. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
Yahoo
2 days ago
- Business
- Yahoo
Stocks jump after Trump's EU tariff pause
In a move that's become something of a strategic mantra, President Donald Trump announced a pause on his promise to enact a new 50% trade tariff on import goods from the European Union following a conversation with European Commission President Ursula von der Leyen over the weekend. In a posting to Truth Social Monday morning, Trump defended last week's tariff declaration but said the progression of trade talks with EU officials was a positive sign that a new agreement could be reached. 'I was extremely satisfied with the 50% Tariff allotment on the European Union, especially since they were 'slow walking (to put it mildly!), our negotiations with them,'' Trump wrote. 'Remember, I am empowered to 'SET A DEAL' for Trade into the United States if we are unable to make a deal, or are treated unfairly. I have just been informed that the E.U. has called to quickly establish meeting dates. This is a positive event, and I hope that they will, FINALLY, like my same demand to China, open up the European Nations for Trade with the United States of America. They will BOTH be very happy, and successful, if they do!!!' Investors were spooked by Trump's announcement last Friday that he was considering new tariffs on EU goods as well as foreign-made Apple iPhones and the major U.S. stock indexes all showed declines to end the week. But markets were buoyed by a Trump social media post on Sunday indicating that he was pushing out a potential start date for new EU tariffs from June 1 to July 9. Around midday Tuesday, the Dow Jones Industrial Average was up over 1.3%, the S&P 500 had gained 1.6% and the Nasdaq Composite had gained over 2%. In a Saturday post on X, von der Leyen shared an upbeat report on her talk with Trump and noted the 27-nation EU was poised to move forward with U.S. trade talks. 'Good call with @POTUS,' von der Leyen wrote. 'The EU and US share the world's most consequential and close trade relationship. Europe is ready to advance talks swiftly and decisively. To reach a good deal, we would need the time until July 9." New data showing an unexpectedly sharp rise in consumer confidence in May was also helping boost investor markets following the Memorial Day holiday. The Conference Board reported on Tuesday its Consumer Confidence Index increased by 12.3 points in May to 98.0, up from 85.7 in April. The jump exceeded the Dow Jones Consensus expectation of an 86 reading, per a report from CNBC. Stephanie Guichard, senior economist for the Conference Board, said declining international trade tensions had a positive impact on U.S. consumer outlooks across multiple categories. 'Consumer confidence improved in May after five consecutive months of decline,' Guichard said in the report. 'The rebound was already visible before the May 12 U.S.-China trade deal but gained momentum afterwards. The monthly improvement was largely driven by consumer expectations as all three components of the Expectations Index — business conditions, employment prospects and future income — rose from their April lows." While consumer confidence was mostly on the rise in May, Americans' collective feelings about job prospects remained a weak spot. 'Consumers were less pessimistic about business conditions and job availability over the next six months and regained optimism about future income prospects,' Guichard said. 'Consumers' assessments of the present situation also improved. However, while consumers were more positive about current business conditions than last month, their appraisal of current job availability weakened for the fifth consecutive month.' The new report also notes consumers had a positive response to trends in U.S. investment markets which have, in spite of last Friday's down cycle, been mostly in recovery mode since the most severe of Trump's earlier trade decrees were put on pause. 'With the stock market continuing to recover in May, consumers' outlook on stock prices improved, with 44% expecting stock prices to increase over the next 12 months (up from 37.6% in April) and 37.7% expecting stock prices to decline (down from 47.2% in April)," Guichard said. 'This was one of the survey questions with the strongest improvement after the May 12 trade deal.' On May 12, Trump announced a 90-day pause on his previous 145% tariff assessment on many imported goods from China. That move followed an April 9 pause on a wide swath of reciprocal international tariffs revealed a week earlier in Trump's self-proclaimed 'Liberation Day' decree. The on-again, off-again tariff policy gyrations have cast a cloud of uncertainty over the U.S. business sector and roiled investment markets. And a growing number of U.S. businesses, including retail giant Walmart, have recently signaled coming price increases due to tariff assessments, in spite of the various pauses on previously announced levies. Here's where new U.S. tariffs stand for the moment: China tariffs now at 30%, including a 10% base rate and 20% fentanyl-targeted levy. Tariffs of 25% are in place on steel and aluminum imports, imported automobiles and goods from Canada and Mexico not covered by the United States-Mexico-Canada Agreement. Imports from all other countries are subject to a 10% trade levy. Sign in to access your portfolio
Yahoo
2 days ago
- Business
- Yahoo
5 Discretionary Stocks to Buy on Solid Rebound in Consumer Confidence
U.S. consumers have regained some of their faith in the nation's economy over the past month, or since the United States and China announced a trade truce and temporarily halted tariffs. Markets have since rebounded sharply and consumers are a lot more confident now. Although trade anxiety persists, the situation has improved a lot from the lows seen in March and early April. This saw consumer confidence rebounding sharply in May. Given this positive sentiment, it would be ideal to invest in consumer discretionary stocks such as Netflix, Inc. NFLX, JAKKS Pacific, Inc. JAKK, Kontoor Brands, Inc. KTB, Fox Corporation FOX and Charter Communications, Inc. CHTR. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. The Conference Board said on Tuesday that consumer confidence jumped to 98 in May, up 12.3 points from April and sharply above the consensus estimate of a rise to 87. The jump comes after five straight months of decline. Also, the present situation index climbed 4.8 points month over month to 135.9. The expectations index surged to 72.8 in May, up 17.4 points sequentially. Also, 44% of investors now believe that stocks will be higher over the next 12 years, increasing 6.4% from April. The labor market outlook also improved, with 19.2% expecting more job availability in the next six months. The Conference Board said that most of the positive sentiment came after trade tensions between the United States and China eased. Consumers and investors grew concerned about the future of the economy as Trump's sweeping tariffs on the trading partners of the United States escalated trade war fears. However, the Trump administration has since paused tariffs on most countries and has reached deals with some of the trading partners. Consumer sentiment got a further boost on Wednesday after a federal trade court ruled that Trump's tariffs are 'illegal' and blocked them. Wednesday's ruling could further boost consumers' confidence. Also, markets are pricing two 25 basis point rate cuts starting September this year as inflation has been showing signs of cooling. Netflix, Inc. is considered a pioneer in the streaming space. NFLX has been spending aggressively on building its portfolio of original shows. This is helping Netflix sustain its leading position despite the launch of new services like Disney+ and Apple TV+, as well as existing services like Amazon Prime Video. Netflix's expected earnings growth rate for the current year is 27.7%. The Zacks Consensus Estimate for current-year earnings has improved 3% over the past 60 days. NFLX currently carries a Zacks Rank #2. JAKKS Pacific, Inc. is a multi-brand company that has been designing and marketing a broad range of toys and consumer products since 1995. JAKK not only develops its proprietary brands and marks but also uses licensing trademarks to access a far greater range of marks. Moreover, JAKKS Pacific licenses technology developed by unaffiliated inventors and product developers to enhance the design and functionality of its products. JAKKS Pacific'sexpected earnings growth rate for the current year is 12.7%. The Zacks Consensus Estimate for current-year earnings has improved 3.1% over the past 60 days. JAKK currently sports a Zacks Rank #1. Kontoor Brands, Inc. is an apparel company. KTB designs, manufactures and distributes products. KTB'sbrand consists of Wrangler, Lee and Rock & Republic. Kontoor Brands Inc. is based in Greensboro. Kontoor Brands' expected earnings growth rate for the current year is 9.6%. The Zacks Consensus Estimate for current-year earnings has improved 2.9% over the past 60 days. KTB currently carries a Zacks Rank #2. Fox Corporation produces and distributes news, sports and entertainment content. FOX's brand includes FOX News, FOX Sports, the FOX Network, the FOX Television Stations and sports cable networks FS1, FS2, Fox Deportes and Big Ten Network. Fox Corporation's expected earnings growth rate for the current year is 32.36%. The Zacks Consensus Estimate for the current-year earnings has improved 2% over the past 60 days. FOX presently carries a Zacks Rank #1. Charter Communications, Inc. is the second-largest cable operator in the United States and a leading broadband communications company providing video, Internet and voice services. CHTR served approximately 30.1 million customers in 41 states through its Spectrum brand as of Dec. 31, 2024. Charter Communications' expected earnings growth rate for the current year is 13.2%. The Zacks Consensus Estimate for the current-year earnings has improved 4.5% over the past 60 days. CHTR presently has a Zacks Rank #2. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Netflix, Inc. (NFLX) : Free Stock Analysis Report JAKKS Pacific, Inc. (JAKK) : Free Stock Analysis Report Charter Communications, Inc. (CHTR) : Free Stock Analysis Report Fox Corporation (FOX) : Free Stock Analysis Report Kontoor Brands, Inc. (KTB) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
