US ECONOMY & POLITICS

US Jobless Claims Drop to 230,000, Lowest in Three Weeks – Bloomberg, 8/24/2023

• Applications for US unemployment benefits fell to the lowest level in three weeks, suggesting demand for workers is still healthy.
• Initial claims decreased by 10,000 to 230,000 in the week ended Aug. 19, according to Labor Department data out Thursday.
• The median estimate in a Bloomberg survey of economists called for 240,000 applications.
• On an unadjusted basis, claims declined last week to around 198,000, the lowest since October.
• However, the drop was offset somewhat by the biggest jump in applications in Hawaii since the onset of the pandemic after devastating wildfires.
• Continuing claims, which include those who have received benefits for longer than one week, edged down to 1.7 million in the period through Aug. 12.
• The four-week moving average, which smooths out some of that volatility, climbed to 236,750.

US Business Equipment Orders Remain Tepid on High Interest Rates – Bloomberg, 8/24/2023

• Orders placed with US factories for business equipment increased slightly in July after a downward revision to the prior month, suggesting companies are somewhat cautious about capital investment amid high borrowing costs and economic concerns.
• The value of core capital goods orders, a proxy for investment in equipment that excludes aircraft and military hardware, increased 0.1% last month after a revised 0.4% decline in June, Commerce Department figures showed Thursday.

• Excluding transportation equipment, orders rose 0.5%.
• Orders for defense capital goods rose 2.5% after large declines in prior months.

Bullard Says Reaccelerating US Economy Could Prompt Higher Rates – Bloomberg, 8/24/2023

• Former Federal Reserve Bank of St. Louis President James Bullard said a pickup in economic activity this summer could delay plans for the Fed to wrap up interest-rate increases.
• “This reacceleration could put upward pressure on inflation, stem the disinflation that we’re seeing and instead delay plans for the Fed to change policy,” Bullard said Thursday during an interview with Bloomberg Television ahead of the Kansas City Fed’s annual economic policy symposium in Jackson Hole, Wyoming.
• Bullard, who resigned last month to become dean of the Mitchell E. Daniels, Jr. School of Business at Purdue University, was an influential voice at the Fed who called for aggressive interest-rate hikes to fight the recent inflation surge.
• The former St. Louis Fed chief said if progress on inflation stalls, or if price pressures strengthen, “that would suggest a higher rate profile for the Fed than otherwise.”
• “I think the probabilities are that we are in a new regime that will be a higher interest-rate regime,” Bullard said on BTV.
• “Inflation is above target today. Core inflation is likely to be sticky and come down rather slowly.”

Vivek Ramaswamy Grabs Spotlight at First Republican Primary Debate – Wall Street Journal, 8/24/2023

• Vivek Ramaswamy, the 38-year-old political novice, grabbed the spotlight at Wednesday’s prime-time GOP presidential debate, but there was little sign he or any other contender had found a new strategy for overtaking front-runner Donald Trump.
• The former president, who skipped the GOP’s first debate of the nominating process in favor of a pretaped interview with Tucker Carlson, was positioned to limit the attention that any of his rivals might draw from the event.
• But he was a formidable if combative presence throughout the event, interrupting and tussling with far more experienced politicians and exciting the feisty audience with red-meat statements, declaring that “the climate change agenda is a hoax,” calling for “war on the federal administrative state” and offering: “Do you want incremental change, or do you want a revolution?”
• When he called Trump “the best president of the 21st century,” viewers may have asked why the political newcomer was putting himself forward as someone who could do a better job.
• He offered an answer in an introductory statement, saying it was time to choose a new generation to solve the nation’s problems.
• DeSantis didn’t make any apparent slip-ups during the debate, a steady performance that might reassure any voters and donors having second thoughts about him amid his substantial decline in public opinion polls.
• “Now is not the time for on-the-job training,” said former Vice President Mike Pence. “We don’t need to bring in a rookie.”

EUROPE & WORLD

Lira Rallies as Turkey Stuns With Biggest Rate Hike in Years – Bloomberg, 8/24/2023

• Turkey raised interest rates far more than investors expected, triggering a rally in the lira, in the latest sign that a new lineup of central bankers favors aggressive moves to curb inflation running near 50%.
• The lira reversed losses after the decision and then extended its rally, appreciating as much as 7% against the US dollar.
• The Monetary Policy Committee, under Governor Hafize Gaye Erkan, raised the benchmark one-week repo rate to 25% from 17.5%, the sharpest increase since 2018.
• Most economists polled by Bloomberg predicted a hike to 20%.
• It’s the latest indication that Turkey’s new administration is prepared to move away from the unorthodox policies — including ultra-low borrowing costs — that were championed by President Recep Tayyip Erdogan but caused foreign traders to flee the country’s bond and stock markets en masse.

China Urges Banks to Boost Stock Investments to Support Market – Bloomberg, 8/24/2023

• Chinese authorities ramped up efforts to bolster the nation’s fragile financial markets, urging the country’s pension fund and some large-scale banks and insurers to increase stock investments.
• The China Securities Regulatory Commission held a seminar on Thursday with executives of the financial institutions, who vowed to help stabilize the stock market and boost economic development, according to a CSRC statement.
• The banks and insurers that attended weren’t named.
• China has taken a series of steps to stabilize markets recently, from requesting state-owned banks to escalate intervention to support the yuan, to slashing handling fees in stock transactions.
• CSRC urged executives at the longer-term funds to boost equity investments and pledged to establish a long term evaluation system over three years, according to the statement.

RBC plans thousands of job cuts after profit beat; TD misses on higher expenses – Reuters, 8/24/2023

• Royal Bank of Canada warned of a softer economy ahead and plans to cut about 1,800 job to reduce costs after Canada’s largest bank beat analysts’ estimates for the third quarter on Thursday.
• The bank said the number of full-time employees was down 1% from the prior quarter, and it expects to further reduce headcount by about 1% to 2%.
• The bank had 93,753 full-time employees as of July 31.
• The country’s second-largest bank Toronto-Dominion Bank, however, missed analysts’ estimates for quarterly profit, which was hurt by higher expenses, rainy day funds to cover for unpaid loans and weakness in its U.S. business.
• Net interest income- the difference between what banks make on loans and pay out on deposits – rose 6.7% to C$6.29 billion at RBC and 3.5% to C$7.29 billion at TD.
• RBC reported adjusted earnings of C$2.84 per share, beating analysts’ estimates of C$2.71 per share, according to Refinitiv data.
• TD’s adjusted earnings of C$1.99 per share fell below the estimate of C$2.04.
• The bank’s earnings were also impacted by a C$306 million charge related to the termination of its First Horizon acquisition.
• TD set aside C$766 million, a jump from C$351 million a year ago, while RBC set aside C$616 million for credit losses, up from C$340 million, as consumers struggle to make payments amid high costs of living.
• At TD, however, income from its Canadian personal and commercial banking segment fell 1% and fell 9% at its U.S retail unit.

Putin Shores Up Power Base After Prigozhin Crash in Russia – Bloomberg, 8/24/2023

• The plane crash that presumably killed Wagner founder Yevgeny Prigozhin restored Vladimir Putin’s reputation as Russia’s unchallengeable leader for many of the country’s elite, even as the cause of the disaster may never be fully established.
• The mercenary leader’s demise removes a man who had courted impunity after leading the mutiny that threatened the Russian president’s grip on power.
• His elimination is a strong stabilizing factor for Putin’s regime because it shows that anyone challenging him comes to a bad end, according to four people close to the authorities, who asked not to be identified because the matter was sensitive.
• Many in the Russian elite had been shocked that Putin failed to immediately punish Prigozhin after the June rebellion that he’d denounced as treason.
• The crash that killed all 10 people on board the private jet traveling from Moscow to St. Petersburg on Wednesday took place exactly two months after the uprising the president said had brought Russia to the brink of “civil war.”
• Putin continued with his schedule Thursday, addressing the summit of BRICS nations in South Africa by video link and later holding a televised meeting in the Kremlin with members of a tank crew that had fought in Ukraine.
• He made no reference to Prigozhin at either event.

Japan Starts Releasing Water From Fukushima Nuclear Plant Into Pacific – Wall Street Journal, 8/24/2023

• Japan began discharging slightly radioactive wastewater from the Fukushima Daiichi nuclear plant on Thursday, prompting China to suspend the import of all Japanese fish and other aquatic products.
• Plant operator Tokyo Electric Power, or Tepco, said it started releasing the water into the Pacific Ocean from a discharge point at the end of an undersea tunnel about six-tenths of a mile from the shoreline.
• The government had announced the planned discharge on Tuesday.
• In China, which has ratcheted up criticism of the discharge amid broader diplomatic tensions with Tokyo, the government said it would completely suspend aquatic imports such as fish and shellfish from Japan.
• Japan has said China’s import restrictions aren’t rooted in science and run against the trend of others such as the U.S. and European Union that have removed curbs on Japanese food.
• South Korea has maintained import curbs on food from Fukushima and nearby, citing widespread fears among the public.

Shein Strikes Deal With Forever 21 – Wall Street Journal, 8/24/2023

• Shein and Forever 21 may soon be fast-fashion friends.
• The two rivals have entered into a partnership that paves the way for the Asian e-commerce powerhouse to sell Forever 21 dresses, jeans and accessories on its site.
• Down the line, Shein shops could operate inside Forever 21 stores, the companies said.
• The arrangement marks the next step in Shein’s evolution beyond selling apparel at rock-bottom prices produced in small batches.
• In the deal, Shein is acquiring roughly one-third of Forever 21’s operator, Sparc Group.
• Sparc, in turn, is taking a minority stake in Shein, which was valued at $66 billion in a funding round earlier this year.

Factmonster – TODAY in HISTORY

• Mount Vesuvius erupted and buried the towns of Pompeii and Herculaneum. – 79
• 70,000 French Protestants, or Huguenots, were killed in the St. Bartholomew’s Day massacre. – 1572
• The British set fire to the White House and the Capitol when they invaded Washington, DC during the War of 1812. – 1814
• Mexico gained its independence from Spain with the Treaty of Cordoba. – 1821
• The North Atlantic Treaty went into effect. — 1949
• France became the world’s fifth nuclear power as it exploded a hydrogen bomb in the South Pacific. – 1968
• Mikhail Gorbachev resigned as the general secretary of the Communist Party after a failed coup attempt against him. – 1991
• Hurricane Andrew hit Florida, causing record damage. – 1992