Latest news with #Sløk
Yahoo
24-05-2025
- Business
- Yahoo
A top Wall Street economist says the bond market is signaling a dire scenario for the economy is in sight
Torsten Sløk, the chief economist of Apollo, thinks stagflation is coming for the US. That's a dreaded scenario where the economy slows while inflation remains high. Sløk pointed to the bond market, which appears to be pricing in higher inflation and weaker growth. A top Wall Street economist says the bond market is sending a dire warning about what could be ahead for the US economy. Torsten Sløk, the chief economist of Apollo Global Management, said he believes the recent spike in bond yields is signaling that the economy could be headed for a period of stagflation. It's an economic scenario that hobbled the US economy in the 1970s, and it entails a slowdown in economic growth while inflation remains stubbornly high. It's widely considered to be even harder for monetary policymakers to tackle than a typical recession, as central bank officials can't lower interest rates to boost growth out of fear of stoking more inflation. "This is essentially stagflation," Sløk said about what yields are implying about the US economic outlook "By definition, tariffs mean higher inflation, and it means lower growth," he told CNBC on Friday. Bond yields have been rising this year, but the move higher has accelerated in recent weeks. It has been driven partly by concerns about the US budget deficit, and partly by fears that President Donald Trump's tariffs will raise prices, leading to higher interest rates in the economy. The yield on the 10-year US Treasury spiked as high as 4.61% this week, up 63 basis points from lows in early April. This embedded content is not available in your region. The 10-year yield is trading within the range that implies some market participants are pricing in a recession with a stagflation scenario, Naomi Fink, chief global strategist at Nikko Asset Management, wrote in a note this week. The yield on the 2-year US Treasury was about 3.96% on Friday, down 28 basis points from the start of the year. That can be a sign that investors expect the economy to weaken over the near term, which would prompt lower interest rates. Consensus expectations for US economic growth have already started to trend downward, while inflation expectations have climbed, Sløk said in a note to clients this month. Stagflation concerns have been creeping back into the mix of Wall Street commentary as traders turn their attention away from trade deals and eye the longer-run impact of tariffs. JPMorgan boss Jamie Dimon said he believed the economy was still at risk of stagflation this week, though he wasn't necessarily forecasting the scenario. "I think global fiscal deficits are inflationary. I think the remilitarization of the world is inflationary. The restructuring of trade is inflationary," he said, speaking to Bloomberg on Thursday. Nobel laureate Paul Krugman said that he believed price increases stemming from tariffs could come "within weeks," and that the economy was poised to slow. "The inflationary impact of tariffs is coming," the top economist said in a televised interview this week. "Certainly an economic slowdown. Certainly a bump up in the inflation rate. It's stagflation. Maybe it's stagflation-lite, but we're definitely heading for some kind of stagflation." Read the original article on Business Insider Sign in to access your portfolio
Business Insider
24-05-2025
- Business
- Business Insider
A top Wall Street economist says the bond market is signaling a dire scenario for the economy is in sight
A top Wall Street economist says the bond market is sending a dire warning about what could be ahead for the US economy. Torsten Sløk, the chief economist of Apollo Global Management, said he believes the recent spike in bond yields is signaling that the economy could be headed for a period of stagflation. It's an economic scenario that hobbled the US economy in the 1970s, and it entails a slowdown in economic growth while inflation remains stubbornly high. It's widely considered to be even harder for monetary policymakers to tackle than a typical recession, as central bank officials can't lower interest rates to boost growth out of fear of stoking more inflation. "This is essentially stagflation," Sløk said about what yields are implying about the US economic outlook "By definition, tariffs mean higher inflation, and it means lower growth," he told CNBC on Friday. Bond yields have been rising this year, but the move higher has accelerated in recent weeks. It has been driven partly by concerns about the US budget deficit, and partly by fears that President Donald Trump's tariffs will raise prices, leading to higher interest rates in the economy. The yield on the 10-year US Treasury spiked as high as 4.61% this week, up 63 basis points from lows in early April. The 10-year yield is trading within the range that implies some market participants are pricing in a recession with a stagflation scenario, Naomi Fink, chief global strategist at Nikko Asset Management, wrote in a note this week. The yield on the 2-year US Treasury was about 3.96% on Friday, down 28 basis points from the start of the year. That can be a sign that investors expect the economy to weaken over the near term, which would prompt lower interest rates. Consensus expectations for US economic growth have already started to trend downward, while inflation expectations have climbed, Sløk said in a note to clients this month. Stagflation concerns have been creeping back into the mix of Wall Street commentary as traders turn their attention away from trade deals and eye the longer-run impact of tariffs. JPMorgan boss Jamie Dimon said he believed the economy was still at risk of stagflation this week, though he wasn't necessarily forecasting the scenario. "I think global fiscal deficits are inflationary. I think the remilitarization of the world is inflationary. The restructuring of trade is inflationary," he said, speaking to Bloomberg on Thursday. Nobel laureate Paul Krugman said that he believed price increases stemming from tariffs could come "within weeks," and that the economy was poised to slow. "The inflationary impact of tariffs is coming," the top economist said in a televised interview this week. "Certainly an economic slowdown. Certainly a bump up in the inflation rate. It's stagflation. Maybe it's stagflation-lite, but we're definitely heading for some kind of stagflation."
Yahoo
30-04-2025
- Business
- Yahoo
Tariffs threaten a pharmaceuticals shortage, as 95% of ibuprofen comes from China
The U.S. gets the vast majority of common, generic medications from China, meaning President Donald Trump's steep tariffs on Chinese imports could cause a shortage of key drugs. Generic drugs are affordable because of manufacturers' razor-thin margins. Increased costs as a result of tariffs could disincentivize them from producing certain pain-relief meds. Tariffs already have many Americans concerned about the state of the economy, but the incoming taxes on pharmaceutical goods from China could present a more literal headache. The U.S. gets nearly all of its supply of common over-the-counter pain medications from China, meaning President Donald Trump's 145% tariffs on the country could have an outsized impact on the U.S.'s method of sourcing key drugs, Apollo chief economist Torsten Sløk said in a Wednesday blog post. About 95% of the U.S.'s ibuprofen comes from China, Sløk noted, citing data from trade-protectionist advocacy organization Coalition for a Prosperous America and the National Institutes of Health's National Center for Biotechnology Information. More than 90% of the supply of anti-inflammation steroid hydrocortisone also comes from China, as well as 70% of acetaminophen and 45% of the U.S.'s penicillin imports. The U.S. is particularly reliant on China for more affordable, generic drugs, and generic drugs make up 90% of prescriptions filled in the U.S., according to the Food and Drug Administration. Tariffs have already more broadly threatened the availability of consumer products in the U.S. as American companies stockpiled goods before the tariffs went into effect, only to pull back once those products became more expensive. 'The consequence will be empty shelves in U.S. stores in a few weeks and Covid-like shortages for consumers and for firms using Chinese products as intermediate goods,' Sløk said in an April 25 post. These shortages are imminent, according to Gene Soroka, executive director of the Port of Los Angeles, the U.S.'s largest port, which receives about 45% of its imports from China. Seroka has begun to see a 'precipitous drop' in shipments from China that will result in only five to seven more weeks of full inventories on retail shelves, he predicted. The White House did not immediately respond to Fortune's inquiry on plans to exempt medications from tariffs. For America's drug supply, tariffs could make a bad problem worse. The U.S. has contended with stubborn drug shortages in the past three quarters, with 270 active shortages as of March 2025, but down from the all-time high of 323 shortages in early 2024, according to trade organization American Society of Health-System Pharmacists. These shortages can be caused by natural disasters temporarily halting production or regulatory challenges. Key players in the pharmaceutical industry fear tariffs will pile onto the factors driving the scarcity. Profit margins for generic drugs are incredibly thin to keep them affordable, meaning some manufacturers could stop producing drugs that are too expensive to make as a result of the increased cost of raw materials, according to John Murphy, president and CEO of trade group Association of Accessible Medicines (AAM). To make matters worse, Murphy said, any hiccups in the supply chain will also likely mean an increase in drug prices for consumers. 'AAM is concerned…that any duties on pharmaceutical products, particularly inputs, will lead to increased costs of manufacturing generics and biosimilars in the United States and, thus, result in higher prescription drug prices and decreased access for patients in our country,' Murphy said in a March letter to U.S. trade representative Jamieson Greer. Despite Trump's intention with tariffs as encouraging domestic production, American pharmaceutical companies may be hesitant to take a chance on increasing their own manufacturing capabilities, Marta Wosińska, health economist and senior fellow at the Brookings Institution, told USA Today. The future of tariffs—with Trump now considering 'substantially' cutting the levies—creates too much unpredictability for drug companies to take meaningful steps to address them. "Making a billion-dollar investment in the United States when I don't even know whether tariffs are going to be there a month from now makes it a really difficult calculus for companies," Wosińska said. This story was originally featured on
The Guardian
28-04-2025
- Business
- The Guardian
US tariff war hurting trade with China; Beijing ‘confident' of hitting growth targets
Show key events only Please turn on JavaScript to use this feature Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. Donald Trump's trade war is weakening the US economy and causing a plunge in trade with China, economists and logistics firms are warning. Nearly four week's after Trump's 'Liberation Day' announcement of higher tariffs triggered a trade war with Beijing, evidence is mounting that businesses and consumers are cutting back. Torsten Sløk, chief executive at asset manager Apollo Global Management, explains: For companies, new orders are falling, capex plans are declining, inventories were rising before tariffs took effect, and firms are revising down earnings expectations. For households, consumer confidence is at record-low levels, consumers were front-loading purchases before tariffs began, and tourism is slowing, in particular international travel. Sløk has pulled together a chartbook highlighting the damage to company earnings… Photograph: Apollo Global Management …on new orders… Photograph: Apollo Global Management …and notably on trade with China. A chart showing the impact on the US trade war Photograph: Apollo Global Management A trade war is a 'stagflation shock', Sløk fears. He explains that it typically takes between 20 and 40 days for a sea container to travel from China to the US. That means that the slowdown in container departures from China to the US which started in early April will be felt at US ports in early and mid-May. That would hit demand for trucking from mid-May, leading to empty shelves and layoffs in trucking and retail industry, causing what Sløk dubs 'The Voluntary Trade Reset Recession'. Illustration: Apollo Global Management Sløk warned on Friday: In May, we will begin to see significant layoffs in trucking, logistics, and retail — particularly in small businesses such as your independent toy store, your independent hardware store, and your independent men's clothing store. With 9 million people working in trucking-related jobs and 16 million people working in the retail sector, the downside risks to the economy are significant. There are signs today that this trade slowdown is underway, due to the 145% tariff imposed on Chinese imports to the US. The Financial Times reports this morning that the Port of Los Angeles, the main route of entry for goods from China, expects scheduled arrivals in the week starting 4 May to be a third lower than a year before. The new higher tariffs announced on other countries are currently paused, of course, while the US negotiates new trade deals. Trump has claimed to Time Magazine that he's made 200 deals. But this appears to be, well, an exaggeration. US Treasury secretary Scott Bessent told ABC News he believes Trump is 'referring to sub deals within the negotiations we're doing.' Bessent insisted, though, that progress is being made, arguing: If there are 180 countries, there are 18 important trading partners, let's put China to the side, because that's a special negotiation, there's 17 important trading partners, and we have a process in place, over the next 90 days, to negotiate with them. Some of those are moving along very well, especially with the Asian countries. Treasury Secretary Scott Bessent defended President Donald Trump's negotiating strategy on trade deals but said he didn't know whether Trump was speaking directly with Chinese President Xi Jinping. — ABC News (@ABC) April 27, 2025 Last week, shipping giant Hapag-Lloyd reported that its customers have cancelled 30% of shipments to the United States from China….and there has been a 'massive increase' in demand for consignments from Thailand, Cambodia and Vietnam instead. The agenda 11am BST: CBI's distributive trades survey of UK retailing 11am BST: France's unemployment data for March 3.30pm BST: Dallas Fed manufacturing index for April Share Show key events only Please turn on JavaScript to use this feature American customers of fast-fashion giant Shein are now feeling the impact of the trade war. Shein raised the US prices of a swathe of products on Friday, Bloomberg reported, in anticipation of new tariffs on small parcels. Over to Bloomberg for the details: The average price for the top 100 products in the beauty and health category increased by 51% from Thursday, with several of the items more than doubling in price. For home and kitchen products and toys, the average jump was more than 30%, led by a massive 377% increase in the price of a 10-piece set of kitchen towels. For women's clothing the rise was 8%. This follows Donald Trump's decision to end the 'de minimis' exemption for small packages from mainland China and Hong Kong. which had meant that packages under $800 did not qualify for any taxes or tariffs. Share China's policymakers are insisting today that they will hit this year's growth targets, despite the impact of Donald Trump's tariffs. The vice head of China's state planner said on Monday he was 'fully confident' that the world's second-largest economy would achieve its economic growth target of around 5% for 2025. Zhao Chenxin, vice chair of the National Development and Reform Commission, told a press conference that new policies will be rolled out over the second quarter, based on changes in the economic situation. Zhao said: 'The achievements of the first quarter have laid a solid foundation for the economic development of the whole year. No matter how the international situation changes, we will anchor our development goals, maintain strategic focus and concentrate on doing our own thing.' Share Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. Donald Trump's trade war is weakening the US economy and causing a plunge in trade with China, economists and logistics firms are warning. Nearly four week's after Trump's 'Liberation Day' announcement of higher tariffs triggered a trade war with Beijing, evidence is mounting that businesses and consumers are cutting back. Torsten Sløk, chief executive at asset manager Apollo Global Management, explains: For companies, new orders are falling, capex plans are declining, inventories were rising before tariffs took effect, and firms are revising down earnings expectations. For households, consumer confidence is at record-low levels, consumers were front-loading purchases before tariffs began, and tourism is slowing, in particular international travel. Sløk has pulled together a chartbook highlighting the damage to company earnings… Photograph: Apollo Global Management …on new orders… Photograph: Apollo Global Management …and notably on trade with China. A chart showing the impact on the US trade war Photograph: Apollo Global Management A trade war is a 'stagflation shock', Sløk fears. He explains that it typically takes between 20 and 40 days for a sea container to travel from China to the US. That means that the slowdown in container departures from China to the US which started in early April will be felt at US ports in early and mid-May. That would hit demand for trucking from mid-May, leading to empty shelves and layoffs in trucking and retail industry, causing what Sløk dubs 'The Voluntary Trade Reset Recession'. Illustration: Apollo Global Management Sløk warned on Friday: In May, we will begin to see significant layoffs in trucking, logistics, and retail — particularly in small businesses such as your independent toy store, your independent hardware store, and your independent men's clothing store. With 9 million people working in trucking-related jobs and 16 million people working in the retail sector, the downside risks to the economy are significant. There are signs today that this trade slowdown is underway, due to the 145% tariff imposed on Chinese imports to the US. The Financial Times reports this morning that the Port of Los Angeles, the main route of entry for goods from China, expects scheduled arrivals in the week starting 4 May to be a third lower than a year before. The new higher tariffs announced on other countries are currently paused, of course, while the US negotiates new trade deals. Trump has claimed to Time Magazine that he's made 200 deals. But this appears to be, well, an exaggeration. US Treasury secretary Scott Bessent told ABC News he believes Trump is 'referring to sub deals within the negotiations we're doing.' Bessent insisted, though, that progress is being made, arguing: If there are 180 countries, there are 18 important trading partners, let's put China to the side, because that's a special negotiation, there's 17 important trading partners, and we have a process in place, over the next 90 days, to negotiate with them. Some of those are moving along very well, especially with the Asian countries. Treasury Secretary Scott Bessent defended President Donald Trump's negotiating strategy on trade deals but said he didn't know whether Trump was speaking directly with Chinese President Xi Jinping. — ABC News (@ABC) April 27, 2025 Last week, shipping giant Hapag-Lloyd reported that its customers have cancelled 30% of shipments to the United States from China….and there has been a 'massive increase' in demand for consignments from Thailand, Cambodia and Vietnam instead. The agenda 11am BST: CBI's distributive trades survey of UK retailing 11am BST: France's unemployment data for March 3.30pm BST: Dallas Fed manufacturing index for April Share
Yahoo
26-04-2025
- Business
- Yahoo
The China trade war will pummel America's small businesses, Apollo economist says
As trade between the U.S. and China collapses, small businesses will be hit hard, according to Torsten Sløk, chief economist at private equity giant Apollo. Many independent toy, hardware, and clothing stores rely on cheap imports, and firms with 500 employees or less account for nearly half of America's private workforce. Trade between the U.S. and China is falling off a cliff. Vacant shipping containers will soon mean empty shelves—and perhaps the dreaded combo of higher prices and unemployment. President Donald Trump is touting talks of a trade deal between the world's two biggest economies, but Beijing denies any negotiations have taken place. Container shipping from China spiked in late March and early April as firms presumably tried to front-run tariffs, said Torsten Sløk, chief economist at private equity giant Apollo. However, it went into free fall soon after April 9, when the full slate of Trump's taxes on Chinese imports went into effect. It takes about 20-to-30 days for Chinese cargo ships to reach U.S. ports, Sløk said, and another one-to-10 days for those goods to reach stores and factories across the country. 'It's probably sometime by the middle of May that we should begin to see more significant impacts of this in the form of empty shelves in stores with goods that are no longer arriving,' he told Fortune, 'because [of trade] collapsing the way it is.' The U.S. tariff on most Chinese goods, barring a significant carve-out for many electronics, sits at 145%. China has retaliated with a 125% tax on most U.S. imports but also rolled out exceptions for semiconductors and other sectors, like aviation, early Friday. China is America's third-largest trading partner, accounting for nearly $440 billion worth of U.S. imports in 2024, according to the United States Trade Representative. Meanwhile, shipping costs have roughly been cut in half since early January, per the Freightos Baltic Index, which tracks the spot rates for standard 40-foot containers across major international trade lanes. In other words, reduced demand is already hitting the industry's revenues. Significant layoffs in trucking and logistics could further drag down the economy, Sløk said in a note Friday morning. 'In addition, we will soon begin to see higher inflation because there are a significant number of product categories where China is the main provider of certain goods into the U.S. market,' he wrote. That's especially devastating for small businesses like independent toy, hardware, and clothing stores, he added. Most smaller firms rely on importing cheap goods to stay afloat, he explained, and do not have the working capital, or liquidity, that bigger businesses can leverage to weather the storm. 'Large businesses have flexible balance sheets,' Sløk said. 'They are more nimble. They have several product lines and are, therefore, able to easier adjust relative to a small business.' Mom-and-pop shops loom almost just as large, however, when it comes to the health of the broader economy. Small businesses employed about 62 million Americans in 2023, or more than 46% of the private-sector workforce, according to the U.S. Small Business Administration. These companies, which have 500 employees or less on the payroll, also accounted for nearly two-thirds of net job growth from 1995 to 2021, per the agency. Firms of all sizes, meanwhile, must deal with added uncertainty caused by the opposing messaging coming from Washington and Beijing. Trump and Treasury Secretary Scott Bessent have signaled tariffs will come down when a new trade agreement is reached. The president has insisted such talks are taking place, but China has denied those claims, saying it will not come to the table unless the U.S. walks back its 'unilateral' measures. The anxiety is apparent, Sløk said, in recent surveys from regional Federal Reserve banks, some of which showed big declines in new orders and plans for capital expenditures at a standstill. Companies like Southwest, Chipotle, and PepsiCo, he added, have warned on their most recent earnings calls that nervous consumers are starting to cut back. In short, he's worried things could get worse. This story was originally featured on
