"It was a week that investors would rather forget" by Larry Edelman Globe Columnist, August 2, 2019
It was a confusing and bruising few days for investors that even Friday’s solid job report couldn’t salvage.
US stocks wrapped up their worst week of the year, posting a second day of losses sparked by President Trump’s Twitter announcement a day earlier that the United States would slap 10 percent tariffs on some $300 billion of Chinese imports.
The stock market also did not react well Wednesday when Fed chairman Jerome Powell signaled that the quarter-percentage point rate cut made by the central bank that day was only a gentle nudge downward, not the first in a series of reductions that would significantly lower borrowing costs — and provide a bit of insurance against a slowdown.
After he put his credibility on the line.
Trump’s escalation of the trade war with China was a nasty surprise for Wall Street, which had greeted the week with hopes that a new round of talks in Shanghai would go well, but the brief meetings ended with no sign the two sides were any closer to a trade deal.
I'm not surprised the talks went nowhere, not with the U.S. fomenting rebellion in Hong Kong.
“Everything from sneakers to iPhones will likely cost more,” Dec Mullarkey, a Boston-based managing director at SLC Management, a unit of insurer Sun Life Financial, said in note to clients. “Up until now tariffs had been on intermediate products, but now trade tension will be evident in higher price tags.”
Concern about the impact on consumer spending, which accounts for about three-quarters of economic activity, is so high that Friday’s good employment news from the Labor Department was largely shrugged off.
That's what you do with lies and liars after a certain point in time.
Employers added 164,000 jobs last month, in line with analysts’ forecasts, and the jobless rate remained at 3.7 percent, near a 50-year low, government data showed. Average hourly earnings increased 3.2 percent from a year ago, a pickup from a June rate of 3 percent.
Normally a performance like July’s would push stocks higher because it showed the economy was strong enough to absorb new workers, but not so hot as to trigger inflation, but the past week has been anything but normal.
“The solid July jobs number caps an interesting week that kept our corporate clients and our team on alert,” was how a very understated Tony Bedikian, head of global markets at Citizens Bank in Boston, summed it all up.
Despite the pain to investors’ portfolios, the market has had a good year. Moreover, some experts believe the economy is in decent shape. That includes Eric Rosengren, president of the Federal Reserve Bank of Boston.....
Oh, good. I was worried for a minute there.
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I mean, the economic collapse out on the Cape has been the front page news around here:
"Cape Cod rentals are having an unexpectedly slow summer" by Stephanie Ebbert Globe Staff, July 28, 2019
I gue$$ all those work visas were not needed after all.
The last-minute deals and vacancies may be a late-summer boon for procrastinators, but some Cape Cod property owners are attributing an unexpectedly slow summer to a troublesome pair of unwelcome arrivals: sharks and taxes.
Shark sightings have been closing beaches and alarming swimmers since last summer saw the first fatal shark attack in Massachusetts since 1936. The taxes, enacted last winter, took their first bite on July 1, imposing hotel taxes on summer house rentals for the first time in Massachusetts, adding 12.45 to 14.45 percent to already steep rates.
The Cape Cod Chamber of Commerce acknowledges the down market, though it has yet to see data for June to know how bad it is, but hotel room rentals — for which taxes are unchanged — are also down about 5 percent so far this year, said the chamber’s chief executive, Wendy K. Northcross, who noted how unusual that is. “For the last decade, they’ve seen year-over-year increases,” she said.
$omething is going on then.
Northcross suspects other factors are in play beyond the sticker shock of new taxes: a wet, uninspiring spring and a glut in rentals on the market.
Meant a cooler spring, but that doesn't fit the narrative.
“Weather has not been our friend,” she said, an understatement for a part of the state that saw two rare tornadoes blow through last week, and, of course, sharks are not good for marketing beach vacations. Swimming was briefly barred at several Cape beaches last week alone, for safety’s sake, and off Truro, witnesses described seeing a grisly “eruption of blood” as a seal was devoured by a shark, but the sharks haven’t come to Harwich — that was the tornadoes — so Cahalane isn’t sure why her house is being overlooked for the first time in two decades. She stays at her parents’ house for the summer, while vacationers use her home.
The seals are the food supply that is drawing sharks, and if you are wary about jumping into the water you can always make sand sculptures on the beach.
Some property owners are blaming the new taxes for deterring vacationers — and questioning whether policy makers considered all the potential impacts on locals.
“I think that the worst sharks in Wellfleet are the politicians who imposed the 12.45 percent tax on short-term rentals for properties owned by individuals who are just trying to rent out their summer home for a few weeks over the summer,” said Wellfleet property owner John Salsberg.
The Massachusetts Short-Term Rentals Law was signed in December 2018 by Governor Charlie Baker. The law was aimed at Airbnb profiteers and leveled the taxation field with hotels, where tourists were already paying occupancy taxes. The law applies to every house that’s rented for more than two weeks a year. It makes no distinction between a real estate company renting dozens of properties and a year-round resident who leaves her cottage for the summer to make rental income.
That was when I ran out of oxygen.
The tax was supported by the Chamber of Commerce, and it includes multiple layers: Lawmakers from Cape Cod tacked on a levy to fund water-quality improvements, and some Cape towns raised their local occupancy tax rate at the same time.
Each rental is subject to the 5.7 percent lodging tax imposed by the state, a 2.75 percent water fund tax, and a local tax of either 4 or 6 percent.
All told, that increased the cost of a rental by 12.45 percent in Chatham, Dennis, Eastham, Falmouth, Harwich, Truro, and Wellfleet, and by 14.45 percent in Barnstable, Bourne, Brewster, Mashpee, Orleans, Provincetown, and Yarmouth. So a weekly rental for a house in Yarmouth that once cost $4,000 a week now goes for $4,578.
Some property owners tried to soften the blow to renters by dropping their rental fees. Salsberg, who co-owns a house on Lieutenant Island in Wellfleet with his wife and friends, cut his rate 12.45 percent before the season started, but his beachfront house, with a huge deck and sweeping views, is still sitting open next week — and in the final week of August, even after he discounted the price another 23 percent.
He estimates they’ve lost $10,000 for the summer. “I would have been paying state income tax on that,” he said. “All it is doing is hurting individuals like me and renters, who look for an opportunity just to be in a house, by bumping up their costs.”
Welcome to Ma$$achu$etts!
The taxes kicked in on July 1. That narrowly spared Fourth of July revellers, whose weeklong rentals technically started in June. Reservations that were booked before the start of 2019 were also exempted this year.
Stephen Giatrelis still has gaping holes on the calendar for his Hyannis waterfront luxury house. Even after he reduced the rate to $4,000 a week, from $5,000 (before taxes), he wasn’t able to lock in his current renter until Wednesday of last week, and he still has vacancies in August.
“I don’t know if everyone’s afraid of the sharks or the taxes or what,” Giatrelis said.
It's not the sharks with the State Police Air Wing casing Cape waters, and as long as you are not trapped on rocks with the rental on fire, then this is all bull.
Typically, the house is booked for seven weeks; so far this year, it’s booked only for four.
“I’ve been hearing from everyone, other friends that own property, that they’re off, too, this year,” said Giatrelis, a builder and developer who lives in Mashpee.
State Senator Julian Cyr — a Democrat who represents the Cape, grew up in the hospitality industry, and has family ties to the rental industry — said it’s too soon to pinpoint the reason for the softness in the market.
“I think it’s too early to tell if there’s one definitive factor,” Cyr said. “I think as it relates to short-term rentals, we’ve never had an occupancy tax on this. We went from having no tax to having a tax on it; I’m sure there’s some sticker shock.”
He also noted that with the increasing ease and popularity of online sites, from Vrbo to the Cape’s own WeNeedAVacation.com, more homeowners have been trying their luck at renting out their properties, and some homeowners may be losing out with all the new competition.
They are down across the board and anecdotally, so WTF?
“The tax is definitely going to force owners to do work on their properties, get them remodeled or at least updated if they’re going to rent,” said Cape real estate agent Joe Baker. “People are buying them because they have all these shows on TV. There’s a lot of people doing it now, thinking it’s a get-rich-quick.”
Now he blames your $hitty property and makes it the property owners fault for having a slum.
What is it, a Kushner flat in Baltimore?
Northcross, the chamber CEO, noted the Cape has had rapid growth in short-term rental units.
“It doubled in three years,” she said. “So we could be looking at supply versus demand,” and despite the hype, she thinks the housing and economic trends are probably more to blame than the sharks.
What’s more, she noted, hotel bookings are also down in other places in Massachusetts — from Plymouth to the Islands to the Berkshires, she said.
“Obviously, some consumer behavior is being changed,” she said, “because the Berkshires are down and they don’t have sharks.”
Meanwhile, the $tate says it is $wimming in extra $1 billion and expecting the $ame next year, despite the tax take being less on the Cape, in the casinos, at the pot shops (they blew smoke at you), etc.
Prepare for service cuts later next year, and you better pray there is no downturn.
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Related:
Rates are flat to slightly higher
Home prices slow in May
Boston-area housing gains lag job growth, report says
Those are the complexities of the $15 minimum wage even as cities and towns make progress on housing.
What’s coming to the former GE land in the Seaport?
You mean besides labor unrest?
$8 billion in value lopped off Gillette
It's a clo$e $have with a deep cut.
Also see:
"The Federal Reserve will most likely cut interest rates on Wednesday for the first time since 2008, when the economy was mired in a deep recession, as the central bank tries to keep a record economic expansion from petering out. The expected small change would end an era of gradual rate increases intended to return the economy to a more “normal” state after the Great Recession, when the Fed slashed rates to near zero its approach has largely worked; the US economy is growing, unemployment is at a 50-year low, and wages are slowly rising, but a rate cut at this moment in the cycle sends a signal that the current economy could be as good as it gets. The Fed’s move may cheer President Trump, who has said the economy would have gone up “like a rocket” had the Fed not gotten things wrong, but the independent Fed is likely to make a move driven by precaution, not politics. Manufacturing gauges, which often lead the economy, are slumping across the world. Business investment and confidence have suffered amid Trump’s trade spats and tariffs. A potent recession indicator is flashing red — a sign investors are pessimistic. The Fed’s target interest rate stands between 2.25 and 2.50 percent, roughly half of its 5.25 percent level before the financial crisis, leaving the central bank with limited room to act in the event of a recession. “It’s much more fragile,” Diane Swonk, chief economist at Grant Thornton, said of the economy, explaining that consumers and businesses should be “euphoric” this late in a cycle but are not. That reflects “the uncertainty, and the scars — we still have scars from the crisis,” she said....."
Incredible! We still have scars from the crisis more than ten years ago (lame) as banks and corporations continue reporting record profits, and just the other day I was told there was little sign of a recession or weakness so far and it would take a major event of some sort to knock the economy off course.
WTF is with the mixed me$$ages, 'eh?
Of course, if all that were true and the economy was growing with unemployment at a 50-year low (so is the labor force participation rate, btw), then it would be a booming summer season on the Cape, not an unexpectedly slow one.
US stocks slip ahead of Fed meeting
"The biggest Wall Street banks are facing their lowest first-half trading revenue in more than a decade as they contend with reticent clients spooked by a global trade war and volatility in asset prices hovering around record lows."
Oh, the poor Wall Street banks!
Diamond industry continues to struggle
The crisis squeezing the diamond industry is gaining momentum.
"Consumer spending rose a healthy 0.3 percent in June, slightly below the strong gains of the past three months, while incomes turned in a solid 0.4 percent gain for the fourth straight month. The Commerce Department said Tuesday that the spending increase followed strong gains of 1 percent in March, 0.6 percent in April and 0.5 percent in May as the consumer rebounded following a lackluster start to the year. An inflation gauge favored by the Federal Reserve showed prices rising 1.4 percent over the past year, well below the Fed’s 2 percent inflation target. Fed officials are widely expected to reduce their benchmark interest rate for the first time in a decade at this week’s meeting, in part because of the continued short-fall in inflation despite strong economic growth and unemployment at near a 50-year low."
Meanwhile, a mixed batch of corporate earnings helped drag major US stock indexes slightly lower Tuesday, pulling the market farther from its recent record highs for a second straight day, and Merck’s profits soared on sales of Keytruda and Januvia as vaccines helped drive Merck’s second-quarter profit up a whopping 54 percent, blowing past Wall Street expectations.
"The Fed’s tug-of-war with Wall Street will drag on despite an unusual rate cut" by Larry Edelman Globe Columnist, July 31, 2019
With Wall Street, it’s always “what have you done for me lately?”
After clamoring for the Federal Reserve to lower interest rates, big investors got their wish on Wednesday: The central bank, as widely expected, trimmed its benchmark rate by a quarter-percentage point, a move officials said they took to insulate a relatively healthy US economy from a global slowdown and mounting trade strife, but stock prices promptly slumped as Fed chairman Jerome Powell said that he didn’t anticipate a string of additional reductions. Many investors had assumed at least another quarter-point cut as soon as September, and perhaps more, and had driven stocks up to record levels.
President Trump, who has complained repeatedly that the Fed is holding back the economy with high rates, weighed in with his own objection. Of course, the president is eager to see the economy — a bright spot in his first term — grow through the election next year.
The central bank’s action was quite un-Fed-like; policy makers rarely cut rates when the economy is chugging along like it is today, with a strong job market and consumers spending at a brisk clip. Two members of the policy-setting Federal Open Market Committee — Eric Rosengren, president of the Boston Fed, and Esther George, his counterpart at the Kansas City Fed — voted against the cut.
The Fed also said it would end the runoff of its $3.8 trillion asset portfolio on Thursday, two months earlier than previously planned. That is another way to stimulate the economy. Powell justified the action by citing soft business investment as evidence that weaker economies in Europe and China were threatening US growth. Also hurting business confidence is the US trade fight with China, he said. A brief round of talks in Shanghai ended Wednesday with no apparent sign of progress.
The Fed has the flexibility to ease credit, which will lead to lower rates on consumer loans but also cut interest paid on savings accounts. Inflation remains stubbornly below its 2 percent target, so Powell can afford to give a jolt to the economy without much risk of sparking a surge in prices. Too little inflation is actually a bad thing because it can lead to deflation, where prices — and wages — spiral downward, but the Fed’s move does come with other risks.
What he is getting at on the savings accounts is that the day may come were you pay the bank for the privilege of them holding your money. It's called a negative interest rate, and its a pocket-picking move in case of collapse.
First, with rates well below pre-financial-crisis levels, Powell now has less ammunition to work with if the economy sours down the road.
Second, the Fed is in danger of being held captive by Wall Street. Last fall, when policy makers were raising rates, the market tanked. Stocks recovered only after Powell pledged to be patient before making additional moves, and then put more increases on hold. Wednesday’s rate cut feels like the Fed is seeking to take back its widely criticized quarter-point rate hike in December.
Yeah, he's a captive. More a like a commi$$ioner, for those very banks make up the core of the Federal Re$erve. That's the $hell game bait-and-$witch he has going.
To be fair, investors have some reason to gripe. Then again, Wall Street is never satisfied. Rates can never be too low for the stock market. The tug-of-war with the Fed is far from over.....
They have been made extremely wealthy and they still complain.
So when is greed of money going to be considered an addiction?
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"Stocks fell and bond yields rose on Wall Street Wednesday after the Federal Reserve lowered its key interest rate for the first time in a decade but left investors feeling uncertain about the likelihood of further cuts. Chairman Jerome Powel said there could be more cuts, but that the central bank was not intending to embark on a long cycle of lowering interest rates. The remarks sent stocks into a skid that briefly knocked the Dow Jones industrial average down more than 470 points. Prices of short-term US government bonds fell, sending yields higher. Stocks erased some of their losses later during Powell’s news conference, when he seemed to shift his message to leave open the possibility that the Fed would cut rates again....."
Looks like he is already a captive of Wall $treet.
"US manufacturing activity deteriorated in July to an almost three-year low, dragged down by slower production and shaky export markets that help explain the Federal Reserve’s decision to reduce interest rates on Wednesday....."
"US companies added a healthy 156,000 jobs in July with larger firms accounting for many of the gains, a private survey found. Payroll processor ADP’s figures don’t include government hiring and frequently diverge from the government’s official report, which is scheduled to be released Friday....."
What exactly is a "healthy job" anyway?
A ri$ing tide, right?
"The annual wages and benefits for US workers rose in the second quarter at a slightly slower pace than the first, suggesting that the lowest unemployment levels in a half century have not triggered rapid gains in worker compensation. The Labor Department reported Wednesday that pay and benefits for all US workers increased 2.7 percent in the April-June quarter from a year earlier, down from a 2.8 percent rise in the first quarter compared to a year ago. The 12-month peak so far in this expansion for wages and salaries was a 2.9 percent gain for the period ending in December of last year."
And yet Chri$tmas was crap! The fourth-quarter saw an actual negative from the year before!
Striking Vineyard bus drivers OK contract
After they got $queezed.
Consumers sue over ‘surprise bills’
The bankruptcy of helicopter operator PHI Inc. has transported the contentious issue of surprise health care bills to the steps of federal court.
Sears retirees who lost insurance plan to get about $135 each
Now they are slowly dying.
GM’s profit up on sales of pickups and SUVs
General Motors said it made $2.42 billion from April through June.
BMW profit fell 29 percent in the 2nd quarter
Nissan to fix nearly 200,000 Altimas
Lyft’s operations chief leaving
Uber laying off 400
It's about a quarter of the marketing team’s global workforce and follows a leadership shake-up in June.
At least you get to ride shotgun for the driving test of Zoe Greenberg (more and more the Globe is nothing but self-centered swill).
In Roxbury, a lifeline of learning for struggling families
Boston biz bigwigs try to help new college grads enter the workforce
You are better off at Harvard than at Yale, and can then work from home:
Somerville mayor says student-housing developer will try to keep tenants in Davis Square block
There is no e$cape!
"Student housing developer buys Davis Square building that houses The Burren" by Tim Logan Globe Staff, July 30, 2019
Big changes could be coming to the heart of Somerville’s Davis Square. Student housing developer Scape, the British firm, which builds privately run dorms, has acquired a string of storefronts on Elm Street that are home to several longstanding neighborhood institutions.
Executives with Scape wouldn’t say what they have planned, but the firm specializes in building privately run student housing that is independent of any particular school. It’s done projects in the United Kingdom, Ireland, and Australia, and has proposed a 15-story building on Boylston Street in the Fenway as its first venture in the United States.....
They will be the holes in the walls for the millennials.
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Want to get something to eat and then take in a movie?
Stonewall Kitchen has a new owner
With bigger ambitions, but "Galen Karlan-Mason’s experience reflects a changing market. Consumers, who historically have considered the price and appearance of their food above all else, are increasingly factoring ethical issues into their purchasing decisions. “Everybody in the food industry recognizes that healthfulness, impact on animals, and the environment are on people’s minds,” said Paul B. Thompson, who studies food ethics at Michigan State University....."
Just don't BDS Israel when you make your GreenChoice!
"Terminal B at Logan International Airport is getting a little tastier. That’s because Sullivan’s on Castle Island, the iconic South Boston restaurant that has served up hot dogs, ice cream, and more since 1951, is opening a satellite location at Logan, officials said. Jennifer Mehigan, a spokeswoman for Massport, the agency that oversees Logan, confirmed via e-mail that Sullivan’s “will be opening in Terminal B by the end of the summer,” and a Sullivan’s cook said the airport spot could be up and running by the end of August. Now jet-setting travelers will have a chance to soak up the Sullivan’s experience at Logan....."
Just don't choke on the climate change.
They are laying it on rather thick, so just give me a burger and fries before the show starts.
