Latest news with #JoeBrusuelas
Axios
09-07-2025
- Business
- Axios
Why everything's coming up Trump on the economy
Why is President Trump escalating a trade war that had seemed dormant, threatening high tariffs on major trading partners, imported copper, and pharmaceuticals? A better question is "why not?" The big picture: Economic, market, and policy developments have been a wind at the president's back in the last two months. The threatened downsides of an erratic policy process have not materialized, and economic naysayers — for the moment, at least — look silly. This backdrop helps explain why Trump feels empowered to follow his instincts, which have long tilted toward aggressive use of trade barriers. Flashback: Three months ago, stock and bond markets were in freefall, forecasters issued recession predictions, retailers warned of empty store shelves, and the outlook for Republicans' signature tax legislation was decidedly choppy. None of that is true today. State of play: The unemployment rate is 4.1%, a tick below its April level. Inflation readings in April and May were lower than forecasters expected. (June inflation data starts rolling in next week.) The stock market is hovering near record highs, and 10-year Treasury yields are below their levels on Inauguration Day in January. While supply chains have been whipsawed by the on-and-off trade war, retailers have thus far been able to maintain steady availability of imported profits at normal prices. It reflects both pre-tariff inventory buildup and the willingness of suppliers and importers to absorb much of the cost of tariffs. The One Big, Beautiful Bill Act was signed into law on July 4, a self-imposed deadline from the president that many in the D.C. smart set thought was unlikely to be met. And while the Federal Reserve isn't cutting interest rates as rapidly or as much as the president would like, a September rate cut looks more likely than not. Reality check: The U.S. economy is a big, complex beast. It will take time for companies to adapt their pricing and supply chains to the kinds of massive shifts in trade policy seen so far in 2025 — and promised in the weeks ahead. The president has been quick to delay or adjust tariffs when the signs of pain become too apparent, evident in climbdowns on April 9, May 12, and this week. In other words, part of the reason April's dire predictions have not materialized is that White House policies have adapted. Of note: Just Tuesday, Trump threatened a 50% tariff on copper and up to 200% on pharmaceuticals. The threats "had effectively zero impact on broader equity valuations, interest rates or the value of the dollar on Tuesday afternoon," wrote RSM chief economist Joe Brusuelas in a note. What they're saying: "One gets the sense that although sector tariffs remain a risk to the economic outlook, corporate margins and commodity prices, investors do not believe that they are going to turn over the economy at current levels," Brusuelas wrote.
Yahoo
05-07-2025
- Business
- Yahoo
Why June's jobs report looks 'a lot better' than it really is
The June jobs report beat expectations, but the data under the surface could be less encouraging. RSM chief economist Joe Brusuelas and Interactive Brokers chief strategist Steve Sosnick join Morning Brief to explain why fading Federal Reserve cut expectations could spell trouble ahead. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. US stock futures rallying on the back of the June jobs report. Still with me, Joe Brusuelas, RSM Chief Economist, and Steve Sosnick, Interactive Brokers' Chief Strategist. So guys, now that we've had a moment to digest and reflect, Joe, I'll go to you first. What's your sort of takeaway, big picture takeaway here? The headline looked a lot better than the actual data. Once you dig deep, you can see aggregate hours worked actually fell. That's not a good sign for forward-looking consumption. Tells me we got some inflationary pressures building if we're pulling people back off the, the workforce. So again, implies no cuts are coming and we're seeing that already being pretty quickly priced in here. Absolutely. We were just checking, you know, sort of the, the CME's, the CME's guy, you know, best estimates. It went from about 25% for a chance for a cut in July to about 4% now, as we speak. Um, out into September, it was a cut, plus maybe a 15% chance of a second cut fully priced in. That's now about 80% chance of a single cut and we're really not looking for anything more than two cuts out to December. So the markets, the markets are speaking. And you know, as we said the Fed cut, the, the likelihood of Fed cuts was evaporating as we were sitting here. Although, as we also said, stocks don't seem to need Fed cuts to keep going up. Stocks, stocks right now, the psychology, I mentioned this the other day, FOMO and MOMO are what's driving this market. It's, or some combination thereof. It's momentum and fear of missing out, and it's, it's, you could see it in the leadership. Nobody wants, nobody wants to lack exposure to the names that have been driving the, driving the bus for most of the second quarter, most of the past two year, two and a half years. Um, again, we'll, you know, there's, there are plenty of theoretical obstacles. Let's see if the market reacts to them. And again, I think earning season is probably that one. And to some of Joe's points, there are some, there's, there's some weakness underlying the economy that I do think the market's going to have to react to, especially if the Fed is not in a position to react to it. P
Yahoo
04-07-2025
- Business
- Yahoo
US labor market adds 147,000 jobs in June while unemployment falls to 4.1%
The June jobs report showed the US labor market remained more resilient than anticipated in the final month of the second quarter. The US economy added 147,000 nonfarm payrolls in June, more than the 106,000 expected by economists. The unemployment rate unexpectedly fell to 4.1%. Economists had expected the unemployment rate to move higher to 4.3%. In May, the US economy added 144,000 jobs while the unemployment held flat at 4.2%. Those figures were revised higher on Friday from a previously reported 139,000 job additions in May. "You're just not seeing any feed through from tariff or trade related stress," RSM chief economist Joe Brusuelas told Yahoo Finance. "We got an absolutely solid payroll number." Brusuelas added, "This feeds right into the forecast of a slowing but solid economy." Average hourly earnings in June rose 0.2% over last month and 3.7% over the prior year. Economists expected wages to rise 0.3% over last month and 3.8% over the prior year. Meanwhile, labor force participation rate fell to 62.3% from 62.4% the month prior. Government employment rose by 73,000 workers in June, accounting for roughly half of the month's gains. "The risk going forward is that slower labor force growth keeps the unemployment rate low even as the number of unemployed rises," Oxford Economics lead US economist Nancy Vanden Houten wrote in a note to clients on Thursday. Following the report, increasing bets on a July interest rate cut from the Federal Reserve reversed. Markets are now pricing in just a 5% chance the central bank lowers rates at its July meeting, down from a 24% chance seen a day prior, per the CME FedWatch Tool. Traders also grew more skeptical of a September move from the Fed, with markets now pricing in a 78% chance the Fed cuts by the end of its September meeting, down from a 94% chance seen a day prior. "Today's data make a rate cut at the July FOMC meeting quite unlikely, in our view," Wells Fargo senior economist Sarah House wrote in a note to clients on Friday. The release comes as signs of cooling in the job market have continued to emerge in recent data. On Wednesday, ADP data showed private employers unexpectedly cut 33,000 jobs in June. This marked the first month of job losses in the private sector since March 2023. Meanwhile, continuing filings for unemployment benefits recently hit their highest level in nearly four years. But the data has yet to indicate a significant, broad-based slowdown in the labor market. On Tuesday, the May Job Openings and Labor Turnover Survey (JOLTS) showed job openings ended May at their highest level since November 2024. The release also showed that quits and hiring rates remained near decade lows. ADP chief economist Nela Richardson told Yahoo Finance during a call with reporters on Wednesday that it is now clear that hiring momentum has slowed in the US labor market. Still, that doesn't mean the second half of the year will bring "consistent job declines," in Richardson's view. This is a breaking news post. More to come... Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer. 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
Axios
01-07-2025
- Business
- Axios
3 big risks to the stock market's record high
The S&P 500 hit its fifth all-time high of the year Monday, with consensus building around more to come as we enter the second half of the year. But strategists warn this stock market rally is not risk-free. Why it matters: Institutional investors are scarred from missing out on the April snapback, which could be priming them for a bias toward optimism that misses three big potential risks. Between the lines: Strategists are cautious about these issues. Economic weakness: Inflation could worsen as tariffs hit the data, or the labor market could worsen. Dollar declines: Ongoing dollar weakness could drive further inflation and fuel a rotation away from dollar-denominated assets, including stocks. Valuation bubbles: With stocks trading at 22 times earnings, above historic levels, are we priced to perfection? The intrigue: The list doesn't mention tariffs since investors don't really view tariffs as an earnings headwind anymore, as we reported. Zoom in: The risks are slowly trickling into the economic data, and frothiness is showing up in technical market indicators. Continuing jobless claims continue rising, and recurring applications for unemployment benefits are at the highest level since 2021, a sign that it is taking jobless Americans longer to find a new job. Layoff rates remain low, but so is hiring. As of April, the hiring rate was consistent with that seen in the 2010s when the unemployment rate was over 6%. Consumer spending fell in May for the second time in 2025. If the shopping retreat continues, it could weigh on corporate earnings. The Bloomberg fear and greed index hit the highest level of greed since March of 2024 after stocks notched the record last Friday. Muted market participation is indicated by the ratio of the equal-weighted S&P 500 to the cap-weighted index hitting its July 2024 low. What they're saying: Joe Brusuelas, principal and chief economist at RSM US, says equity valuations are not sustainable. He is concerned about investors pricing in over a 90% chance of rate cuts by September given inflation risks and currency exchange rates. Believing in rate cuts that soon is "a little bit like going to see that cool F1 movie…It's gonna require the suspension of disbelief to truly enjoy it," he says. Yes, but: It has not paid off to bet against market strength this year, with the S&P 500 up 5.4% year to date. What we're watching: Look at market leadership for clarification on how healthy the current rally is. While large-cap tech drives gains thanks to its weight in the S&P 500, it is the fifth-best performing sector this year, a potential sign of broadening market strength. The bottom line: If the volatility of the first half of the year got you seasick, diversify your portfolio.
Hindustan Times
24-06-2025
- Business
- Hindustan Times
U.S. Attack on Iran Injects Uncertainty Into an Already Uncertain Economy
Gasoline prices could be affected depending how the oil market reacts. The U.S. bombing of Iran and direct involvement in Israel's conflict has added a fresh dose of uncertainty to a U.S. economic picture that was already looking pretty muddled. Recent gyrations in policy and global events have left economists and consumers in a state of confusion. On Monday night, just hours after Iran's retaliatory strike on a U.S. base and while talk of regime change was still in the air, President Trump announced a cease-fire deal between Iran and Israel. Add the geopolitical whipsaw to Trump's on-again/off-again tariff plan and to deportations that sparked mass protests and spooked the hotel and agriculture industries. Businesses have slowed hiring considerably, partly out of concern about tariffs and rising costs, but they aren't engaging in big layoffs and the unemployment rate remains low. Even the Federal Reserve, the steward of the U.S. economy, is torn on where things are headed and whether to cut interest rates. 'If you were to ask me, give me a description of the United States economy, it's 'pervasive uncertainty,'' said Joe Brusuelas, chief economist at RSM, an audit, tax and consulting firm. 'There is too much risk on the table right now. We just don't know in which direction we are truly headed.' Nick Bloom, an economics professor at Stanford, oversees an index that tracks economic uncertainty in the U.S. and globally, based on the number of news articles expressing the sentiment. Readings in recent months have soared, hitting quadruple the long-running average, he said. 'The Iranian conflict will fit exactly in this, this kind of deluge,' Bloom said. 'Every theater of economics and politics seems to be impacted by political and economic uncertainty.' The danger of that is if it hampers investment and hiring, he said. 'If you are running a business or you are thinking about going out and buying a car or buying some new clothes, if you are uncertain about the future, you pause,' he said. Economists said they were encouraged by the conflict's muted impact so far on oil prices. U.S. benchmark crude started climbing after Israel began bombing Iran on June 13 but has turned down, falling 7% Monday to $68.51 a barrel. Tankers are seen at the Khor Fakkan Container Terminal in Sharjah, United Arab Emirates. Despite threats, Iran hasn't blocked tanker traffic in the Strait of Hormuz, through which about 20% of the world's oil supply flows, according to the U.S. Energy Information Administration. A conflict that did cause oil prices to surge would risk igniting another round of inflation at a delicate time for the U.S. economy. A 10% rise in oil prices would cause the core components of the Federal Reserve's preferred inflation gauge, the personal-consumption-expenditures index, to rise by 0.04 percentage points, according to analysis by Goldman Sachs. The bank also estimates that a $10 per barrel increase in oil prices would lower U.S. GDP growth by 0.1 percentage points, after balancing the drag on consumption against the economic boost from investment in the energy sector. Trump has badgered the Federal Reserve to cut interest rates, arguing that the Fed is needlessly inflating federal borrowing costs. Any new hints of inflation heating up again could make it harder for the Fed to justify a rate cut in the months to come. On Monday, Trump cautioned against hikes in oil prices. 'Everyone, keep oil prices down,' he wrote on social media. 'I'm watching. You're playing right into the hands of the enemy.' The U.S. economy isn't as vulnerable to Middle Eastern conflict as it was during the Arab oil embargo of the 1970s. The shale-oil boom of the last 15 years has turned the United States into the world's biggest oil producer, which means that some parts of the country even benefit when prices rise. Canada, Brazil, Guyana and others have also risen as more prominent producers. 'There has been a slow but consistent shift over time in the locus of oil production in the global economy that has really changed the historic association between dynamics in the Middle East and the oil price,' said Cullen Hendrix, a senior fellow at the Peterson Institute for International Economics. Higher global demand for renewable energy and weaker economic growth in China should also act as a brake on oil prices, he added. Still, the potential for escalation in the conflict with Iran adds uncertainty to an economic outlook that was already confusing many economists and consumers. As of late last year the Federal Reserve appeared to be close to finally taming inflation after a more than two year fight, a glide path that Trump disrupted with a flurry of import tariffs as soon as he took office. Most economists expect tariffs to lift prices over the coming months, causing new handwringing at the Fed about how quickly to cut rates. The timing for rate cuts 'could come quickly. It could not come quickly,' Chair Jerome Powell said last week. 'We feel like we're going to learn a great deal more over the summer on tariffs.' Rate projections released last week revealed a widening divergence among the 19 Fed policymakers who gather roughly every six weeks to set rates. While 10 of them penciled in at least two rate cuts this year, the number of officials who think the Fed won't cut at all this year rose to seven, from four in March. Write to Jeanne Whalen at
