Macroeconomic round up: US in line for earnings recession – will Fed still pull trigger?
Jason Walls breaks down the week's biggest news in macroeconomics on NBR Radio, and on demand on MyNBR Radio.
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The US stock market is showing signs of worry, as the S&P 500 is on track to close its first reporting season of negative growth in six years.
More than 90% of S&P 500 companies have reported and at this stage, earnings are down 0.9% in the third quarter.
What’s worse is Reuters data suggests a further drop this quarter, of 2.4%. This would be two consecutive quarters of negative growth – constituting an earnings recession.
A December rate hike by the US Federal Reserve has become a lot more likely after optimistic employment data was realised earlier this month.
"We can't think of any instances when the Fed was hiking during an (earnings) recession," Joseph Zidle, portfolio strategist at Richard Bernstein Advisors in New York, told Reuters.
On the other side of the world, Japan has gone back into recession. Japan had just clawed itself out of trecession in the first quarter of this year.
Its third quarter GDP figures revealed the economy has shrunk 0.8% between July and September.
That followed a revised 0.7% contraction in April-June, which was the first decline in three-quarters.
This poor result will put more pressure on Japan’s prime minister Shinzō Abe, who put together a stimulus package known as “Abenomics” to try and pull Japan out of stagflation.
Last month the Bank of Japan cut its economic growth and inflation projections but held off on expanding stimulus, hoping that the economy recovers well enough to accelerate inflation to reach the ambitious 2% target.
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NBR Radio
Fri, 20 Nov 2015
Fri, 20 Nov 2015
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Macroeconomic round up: US in line for earnings recession – will Fed still pull trigger?
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