Category Archives: Business

economy and business news

Experts: Urbanization Will Spread Housing Crisis Worldwide

More than half of the world’s population lives in cities, according to United Nations figures.  By the middle of this century, 68 percent of the world will be urbanized, adding 2½ billion people to global cities.  The growth will bring problems, including lack of housing, and,  as Mike O’Sullivan reports, some ballooning urban regions already face a housing crisis.

$1*/ mo hosting! Get going with us!

Experts: Urbanization Will Spread Housing Crisis Worldwide

More than half of the world’s population lives in cities, according to United Nations figures.  By the middle of this century, 68 percent of the world will be urbanized, adding 2½ billion people to global cities.  The growth will bring problems, including lack of housing, and,  as Mike O’Sullivan reports, some ballooning urban regions already face a housing crisis.

$1*/ mo hosting! Get going with us!

US Companies Affected by Trump Tariffs Grapple With Uncertainty

The trade war between the United States and China has made for a nerve-wracking summer of uncertainty in Wisconsin, where manufacturing has long been in decline yet remains a vital part of the state’s economy.

At Johnson Level and Tool in suburban Milwaukee, the Trump administration’s thrust-and-parry trade moves with China and other countries have left the company bracing for up to $3.7 million in extra costs annually because of higher tariffs on imports, including some of its levels that are made in China.

The company has a range of options to try to blunt its higher costs — from raising prices on the levels it sells to big box stores to potentially moving some of its manufacturing now done in China to another country to avoid tariffs.

But as companies across America struggle to adapt to the higher prices from import taxes, the options that officials at Johnson Level and Tool face underscore there are no easy answers — and no surefire way to avoid paying more for indispensable imports. As Trump’s tariffs on countless U.S. imports take root, some of the largest U.S. corporations have warned that higher prices are coming.   

For many such companies, a key internal question is whether to absorb the higher costs themselves, at least temporarily, to avoid losing customers — or raise prices immediately. Johnson Level has chosen to raise its prices for the stores that buy its products by 8 percent to 10 percent to match its higher costs imposed by the tariffs.

Levels are a basic tool essential for things like getting doorways square and hanging pictures straight. Though Johnson manufactures some of its levels in Mequon, it imports others that are cheaper to make in China because their tooling machines cost just one-tenth what they do in the U.S., said Paul Buzzell, the company’s chief financial officer. About half of the levels the company sells are imported from China.

The uncertainty over how long the tariffs will remain in place has made it harder to find a solution, Buzzell said. He said he always assumed that if the U.S. increased tariffs, it would give businesses a year or two to prepare by making adjustments with their suppliers.

That was the assumption, he said, when the company “started investing in our suppliers and relationships in China.”

“We have this uncertainty, and almost overnight our business really has changed and so the competitive landscape is different,” Buzzell said.

The first tariffs on Chinese steel and aluminum in June didn’t affect Johnson Level; the company doesn’t import those raw materials. But in July, a second round of tariffs on $50 billion worth of Chinese imports covering hundreds of items, including all the levels and laser levels the company imports, meaning they were now paying 25 percent more for those.

Despite its decline over the years, manufacturing still plays a central role in Wisconsin’s economy, making the survival of companies like Johnson Level essential to the state.

About 16 percent of Wisconsin’s workforce is in manufacturing — second only to Indiana, according to the National Association of Manufacturers . And global trade — whether involving manufacturing, farming or other industries — supports about 800,000 jobs in the state, according to the advocacy group U.S. Chamber of Commerce . That’s roughly a quarter of the state’s total workforce.

In business since 1947, Johnson Level and Tool sells levels and measuring tools to stores nationwide, including Home Depot, Menards, Lowe’s and Ace Hardware.  

Buzzell said some of his customers, whom he declined to name, have already balked at suggested price increases. One business customer that he said accounted for about $2 million in Johnson’s annual sales found another supplier shortly after Johnson raised its prices, Buzzell said.

Margaret Smith, a spokeswoman for Home Depot, said the company works “with suppliers to mitigate impact on customers.” She said she couldn’t elaborate.

Buzzell said the company, which employs about 100 people, has no plans to reduce staff. He wouldn’t disclose Johnson Level’s annual revenue, saying only that it’s under $50 million. Buzzell said one option likeliest to succeed — but also the costliest — would be for the company to find another country not subject to tariffs that can manufacture what it needs. Johnson Level has discussed that possibility, including making in the U.S. what it now imports from China, but it would entail a complex and time-consuming process.

‘Uncertainty’ reigns

“This is a classic example of uncertainty,” Buzzell said. “We’re questioning, should we treat these tariffs as a long-term thing that’s never going away.”

On the other hand, he said, the company must make pivotal decisions even knowing that the Trump administration could rescind its tariff increases at any time.

“You don’t really know what to do,” Buzzell said.

The uncertainty over how long the tariffs will stay is making decisions difficult for other companies that import products from China as well.

“The big question is, nobody knows how long they’ll be in place, so it’s hard making changes,” Austin Ramirez, the CEO of Husco International, said in an interview.

The Wisconsin-based Husco makes hydraulic and electro-mechanical components for cars and uses machines and metal from China.

“This is costing us a fortune,” Ramirez told U.S. Sen. Ron Johnson at a meeting with business leaders in July. Ramirez said the company was incurring about a million dollars a month more in expenses because of the Trump tariffs. Husco International makes roughly a half-billion in total revenue, Ramirez said.   

Husco International does about half its business overseas, with plants in Asia and Europe. The company also has about 100 manufacturing jobs in the U.S. for exports to other countries, but retaliatory tariffs on U.S. exports means those jobs could move elsewhere, Ramirez said.

“Those jobs are at risk because I can move them to overseas plants that aren’t subject to these tariffs,” Ramirez told Johnson.

At Regal Ware, a company that makes pots, frying pans and cast aluminum cookware, $2 million in profits could vanish if tariffs remain in place this year, said Doug Reigl, a vice president at the Wisconsin-based company.

Reigl said the company will consider moving production overseas “or look for ways to take costs out of operations here in the U.S.” if the tariffs stay.  

While layoffs may not be imminent at manufacturing companies, hiring could face a slowdown, said Dr. Joseph Daniels, chairman of the economics department at Marquette University.

“I would say what’s at risk is actually job creation,” Daniels said.

That’s a concern Buzzell shares.

“It’s not going to shut us down,” he said of the tariffs. “But what it does, it theoretically takes away money to invest in long-term projects.”

 

 

$1*/ mo hosting! Get going with us!

US Companies Affected by Trump Tariffs Grapple With Uncertainty

The trade war between the United States and China has made for a nerve-wracking summer of uncertainty in Wisconsin, where manufacturing has long been in decline yet remains a vital part of the state’s economy.

At Johnson Level and Tool in suburban Milwaukee, the Trump administration’s thrust-and-parry trade moves with China and other countries have left the company bracing for up to $3.7 million in extra costs annually because of higher tariffs on imports, including some of its levels that are made in China.

The company has a range of options to try to blunt its higher costs — from raising prices on the levels it sells to big box stores to potentially moving some of its manufacturing now done in China to another country to avoid tariffs.

But as companies across America struggle to adapt to the higher prices from import taxes, the options that officials at Johnson Level and Tool face underscore there are no easy answers — and no surefire way to avoid paying more for indispensable imports. As Trump’s tariffs on countless U.S. imports take root, some of the largest U.S. corporations have warned that higher prices are coming.   

For many such companies, a key internal question is whether to absorb the higher costs themselves, at least temporarily, to avoid losing customers — or raise prices immediately. Johnson Level has chosen to raise its prices for the stores that buy its products by 8 percent to 10 percent to match its higher costs imposed by the tariffs.

Levels are a basic tool essential for things like getting doorways square and hanging pictures straight. Though Johnson manufactures some of its levels in Mequon, it imports others that are cheaper to make in China because their tooling machines cost just one-tenth what they do in the U.S., said Paul Buzzell, the company’s chief financial officer. About half of the levels the company sells are imported from China.

The uncertainty over how long the tariffs will remain in place has made it harder to find a solution, Buzzell said. He said he always assumed that if the U.S. increased tariffs, it would give businesses a year or two to prepare by making adjustments with their suppliers.

That was the assumption, he said, when the company “started investing in our suppliers and relationships in China.”

“We have this uncertainty, and almost overnight our business really has changed and so the competitive landscape is different,” Buzzell said.

The first tariffs on Chinese steel and aluminum in June didn’t affect Johnson Level; the company doesn’t import those raw materials. But in July, a second round of tariffs on $50 billion worth of Chinese imports covering hundreds of items, including all the levels and laser levels the company imports, meaning they were now paying 25 percent more for those.

Despite its decline over the years, manufacturing still plays a central role in Wisconsin’s economy, making the survival of companies like Johnson Level essential to the state.

About 16 percent of Wisconsin’s workforce is in manufacturing — second only to Indiana, according to the National Association of Manufacturers . And global trade — whether involving manufacturing, farming or other industries — supports about 800,000 jobs in the state, according to the advocacy group U.S. Chamber of Commerce . That’s roughly a quarter of the state’s total workforce.

In business since 1947, Johnson Level and Tool sells levels and measuring tools to stores nationwide, including Home Depot, Menards, Lowe’s and Ace Hardware.  

Buzzell said some of his customers, whom he declined to name, have already balked at suggested price increases. One business customer that he said accounted for about $2 million in Johnson’s annual sales found another supplier shortly after Johnson raised its prices, Buzzell said.

Margaret Smith, a spokeswoman for Home Depot, said the company works “with suppliers to mitigate impact on customers.” She said she couldn’t elaborate.

Buzzell said the company, which employs about 100 people, has no plans to reduce staff. He wouldn’t disclose Johnson Level’s annual revenue, saying only that it’s under $50 million. Buzzell said one option likeliest to succeed — but also the costliest — would be for the company to find another country not subject to tariffs that can manufacture what it needs. Johnson Level has discussed that possibility, including making in the U.S. what it now imports from China, but it would entail a complex and time-consuming process.

‘Uncertainty’ reigns

“This is a classic example of uncertainty,” Buzzell said. “We’re questioning, should we treat these tariffs as a long-term thing that’s never going away.”

On the other hand, he said, the company must make pivotal decisions even knowing that the Trump administration could rescind its tariff increases at any time.

“You don’t really know what to do,” Buzzell said.

The uncertainty over how long the tariffs will stay is making decisions difficult for other companies that import products from China as well.

“The big question is, nobody knows how long they’ll be in place, so it’s hard making changes,” Austin Ramirez, the CEO of Husco International, said in an interview.

The Wisconsin-based Husco makes hydraulic and electro-mechanical components for cars and uses machines and metal from China.

“This is costing us a fortune,” Ramirez told U.S. Sen. Ron Johnson at a meeting with business leaders in July. Ramirez said the company was incurring about a million dollars a month more in expenses because of the Trump tariffs. Husco International makes roughly a half-billion in total revenue, Ramirez said.   

Husco International does about half its business overseas, with plants in Asia and Europe. The company also has about 100 manufacturing jobs in the U.S. for exports to other countries, but retaliatory tariffs on U.S. exports means those jobs could move elsewhere, Ramirez said.

“Those jobs are at risk because I can move them to overseas plants that aren’t subject to these tariffs,” Ramirez told Johnson.

At Regal Ware, a company that makes pots, frying pans and cast aluminum cookware, $2 million in profits could vanish if tariffs remain in place this year, said Doug Reigl, a vice president at the Wisconsin-based company.

Reigl said the company will consider moving production overseas “or look for ways to take costs out of operations here in the U.S.” if the tariffs stay.  

While layoffs may not be imminent at manufacturing companies, hiring could face a slowdown, said Dr. Joseph Daniels, chairman of the economics department at Marquette University.

“I would say what’s at risk is actually job creation,” Daniels said.

That’s a concern Buzzell shares.

“It’s not going to shut us down,” he said of the tariffs. “But what it does, it theoretically takes away money to invest in long-term projects.”

 

 

$1*/ mo hosting! Get going with us!

As Markets Swoon, Finance Chiefs Urge US, China to Cool It

The heads of the World Bank and IMF appealed Thursday to the U.S. and China to cool their dispute over technology policy and play by world trade rules, as tumbling share prices drove home potential perils from a clash between the world’s two biggest economies.

Global economic growth is slowing but remains strong, Christine Lagarde, managing director of the International Monetary Fund, said on the sidelines of the IMF-World Bank annual meeting, being held this week on the Indonesian island of Bali.

Countries are mostly in a “strong position,” she said, “which is why we believe we are not seeing what is referred to as ‘contagion.”‘

But the gyrations that rocked Wall Street the day before and Asia and Europe on Thursday, taking the Shanghai Composite index down 5.2 percent and Japan’s Nikkei 225 nearly 4 percent, do partly reflect rising interest rates in the U.S. and some other countries and growing uncertainty over trade, she said.

“It’s the combination of the two that is probably showing some of the tensions that we see in terms of indices, short-term indicators as well as possibly market volatility,” Lagarde said.

The U.S. and Chinese exchanges of penalty tariffs in their dispute isn’t helping, she said.

Her advice was threefold: “De-escalate. Fix the system. Don’t break it.”

She acknowledged that the World Trade Organization, based in Geneva, has made scant headway in recent years toward a global agreement on trade rules that can address issues like complaints over Chinese policies that U.S. President Donald Trump says unfairly extract advanced technologies and put foreign companies at a disadvantage in a quest to dominate certain industries.

“Our strong recommendation is to escalate work for a world trade system that is stronger, that is fairer and is fit for the purpose,” she said in opening remarks. 

‘More trade not less’

Somewhat obliquely, she said policies aimed toward an excessively “dominant position” were not compatible with free and fair trade.

The IMF has downgraded its forecast for global economic growth to 3.7 percent this year from its earlier estimate of 3.9 percent. It also issued reports this week on government finance and financial stability that warn of the risks of disruptions to world trade.

World Bank President Jim Yong Kim said the World Bank is working with developing countries to brace for a further deterioration.

“Trade is very critical because that is what has lifted people out of extreme poverty,” Kim said. “I am a globalist. That is my job. That is our only chance of ending extreme poverty. We need more trade not less trade,” he said.

Kim said the World Bank has launched a “human capital index” to help rank countries by the level of their investments in such areas as education and health care.

Policies to build such human capital are among the “smartest investments countries can make,” he said.

He praised host country Indonesia, a democratic, Muslim-majority country of 260 million, for fostering strong growth but noted there was much room for improvement. The country is ranked 87th of 150 countries in the list.

Indonesia has endured a slew of disasters in recent months. Before dawn on Thursday, an earthquake collapsed homes on Indonesia’s Java island, killing at least three people just two weeks after a major quake and tsunami disaster in a central region of the archipelago killed more than 2,000 people and left perhaps thousands more buried deeply in mud.

Thursday’s magnitude 6.0 quake offshore north of Bali shook the area where the IMF-World Bank delegates are meeting, but there were no signs of significant damage.

The annual financial meetings take place at a time of growing concern over trends other than trade, such as moves to raise borrowing costs in the U.S. and some other regions to help cool growth and keep inflation in check. Rising interest rates are drawing investment flows out of emerging markets in Asia and Latin America at a time when growth in their exports is likely to slow.

Rising debts

Argentina and Pakistan, Venezuela and Zimbabwe are among countries grappling with crises. Concerns are growing, also, over slowing growth in China and rising debts among some developing countries resulting from projects associated with Beijing’s “Belt and Road Initiative” to develop ports, roads and other infrastructure. 

Lagarde said the IMF will send a team to Pakistan in the coming weeks after a meeting with its finance minister, Asad Umar, in which he requested emergency bailout loans.

The IMF chief did not say how much Umar had requested. Analysts say Pakistan is seeking $8 billion in loans to deal with a balance of payments crisis. Pakistan’s currency plunged by around 7 percent earlier this week after word of the loan request was made public.

Asked whether IMF help might amount to a “bailout” for Chinese loans, Lagarde said any such help would have to be completely transparent.

“In whatever work we do we need a complete understanding and complete transparency about the nature of a debt that is bearing on a country,” she said.

The annual summit for global finance brings together central bankers and finance ministers, development experts and civil society groups from across the globe.

Bali has suffered terrorist bombings in the past, and the event was being held amid tight security. A convoy of armed personnel carriers was lined up alongside a beach path and access to the area was tightly controlled. 

Still, about a dozen activists concerned with land grabs and other issues sometimes associated with World Bank-sponsored projects staged a brief, peaceful protest over the cancellation by local authorities of a conference they were to hold in the nearby city of Denpasar.

“If they don’t want to ever hear our voices, what kinds of projects are we expecting?” said Joan Salvador, a member of a Philippine women’s group.

Those involved had badges allowing them to enter the tightly guarded venue, and an IMF official said she would convey their concerns “to the highest levels.”

$1*/ mo hosting! Get going with us!

As Markets Swoon, Finance Chiefs Urge US, China to Cool It

The heads of the World Bank and IMF appealed Thursday to the U.S. and China to cool their dispute over technology policy and play by world trade rules, as tumbling share prices drove home potential perils from a clash between the world’s two biggest economies.

Global economic growth is slowing but remains strong, Christine Lagarde, managing director of the International Monetary Fund, said on the sidelines of the IMF-World Bank annual meeting, being held this week on the Indonesian island of Bali.

Countries are mostly in a “strong position,” she said, “which is why we believe we are not seeing what is referred to as ‘contagion.”‘

But the gyrations that rocked Wall Street the day before and Asia and Europe on Thursday, taking the Shanghai Composite index down 5.2 percent and Japan’s Nikkei 225 nearly 4 percent, do partly reflect rising interest rates in the U.S. and some other countries and growing uncertainty over trade, she said.

“It’s the combination of the two that is probably showing some of the tensions that we see in terms of indices, short-term indicators as well as possibly market volatility,” Lagarde said.

The U.S. and Chinese exchanges of penalty tariffs in their dispute isn’t helping, she said.

Her advice was threefold: “De-escalate. Fix the system. Don’t break it.”

She acknowledged that the World Trade Organization, based in Geneva, has made scant headway in recent years toward a global agreement on trade rules that can address issues like complaints over Chinese policies that U.S. President Donald Trump says unfairly extract advanced technologies and put foreign companies at a disadvantage in a quest to dominate certain industries.

“Our strong recommendation is to escalate work for a world trade system that is stronger, that is fairer and is fit for the purpose,” she said in opening remarks. 

‘More trade not less’

Somewhat obliquely, she said policies aimed toward an excessively “dominant position” were not compatible with free and fair trade.

The IMF has downgraded its forecast for global economic growth to 3.7 percent this year from its earlier estimate of 3.9 percent. It also issued reports this week on government finance and financial stability that warn of the risks of disruptions to world trade.

World Bank President Jim Yong Kim said the World Bank is working with developing countries to brace for a further deterioration.

“Trade is very critical because that is what has lifted people out of extreme poverty,” Kim said. “I am a globalist. That is my job. That is our only chance of ending extreme poverty. We need more trade not less trade,” he said.

Kim said the World Bank has launched a “human capital index” to help rank countries by the level of their investments in such areas as education and health care.

Policies to build such human capital are among the “smartest investments countries can make,” he said.

He praised host country Indonesia, a democratic, Muslim-majority country of 260 million, for fostering strong growth but noted there was much room for improvement. The country is ranked 87th of 150 countries in the list.

Indonesia has endured a slew of disasters in recent months. Before dawn on Thursday, an earthquake collapsed homes on Indonesia’s Java island, killing at least three people just two weeks after a major quake and tsunami disaster in a central region of the archipelago killed more than 2,000 people and left perhaps thousands more buried deeply in mud.

Thursday’s magnitude 6.0 quake offshore north of Bali shook the area where the IMF-World Bank delegates are meeting, but there were no signs of significant damage.

The annual financial meetings take place at a time of growing concern over trends other than trade, such as moves to raise borrowing costs in the U.S. and some other regions to help cool growth and keep inflation in check. Rising interest rates are drawing investment flows out of emerging markets in Asia and Latin America at a time when growth in their exports is likely to slow.

Rising debts

Argentina and Pakistan, Venezuela and Zimbabwe are among countries grappling with crises. Concerns are growing, also, over slowing growth in China and rising debts among some developing countries resulting from projects associated with Beijing’s “Belt and Road Initiative” to develop ports, roads and other infrastructure. 

Lagarde said the IMF will send a team to Pakistan in the coming weeks after a meeting with its finance minister, Asad Umar, in which he requested emergency bailout loans.

The IMF chief did not say how much Umar had requested. Analysts say Pakistan is seeking $8 billion in loans to deal with a balance of payments crisis. Pakistan’s currency plunged by around 7 percent earlier this week after word of the loan request was made public.

Asked whether IMF help might amount to a “bailout” for Chinese loans, Lagarde said any such help would have to be completely transparent.

“In whatever work we do we need a complete understanding and complete transparency about the nature of a debt that is bearing on a country,” she said.

The annual summit for global finance brings together central bankers and finance ministers, development experts and civil society groups from across the globe.

Bali has suffered terrorist bombings in the past, and the event was being held amid tight security. A convoy of armed personnel carriers was lined up alongside a beach path and access to the area was tightly controlled. 

Still, about a dozen activists concerned with land grabs and other issues sometimes associated with World Bank-sponsored projects staged a brief, peaceful protest over the cancellation by local authorities of a conference they were to hold in the nearby city of Denpasar.

“If they don’t want to ever hear our voices, what kinds of projects are we expecting?” said Joan Salvador, a member of a Philippine women’s group.

Those involved had badges allowing them to enter the tightly guarded venue, and an IMF official said she would convey their concerns “to the highest levels.”

$1*/ mo hosting! Get going with us!

Dow Drops 800-Plus Points as US Stocks Dip Sharply

U.S. stocks posted their worst loss since February on Wednesday, the Dow Jones industrial average finishing the day down more than 800 points.

The losses were widespread as bond yields remained high after steep increases last week. Companies that have been the biggest winners on the market the last few years, including technology companies and retailers, suffered steep declines.

The Dow gave up nearly 828 points, or 3.15 percent, to 25,600. The Nasdaq composite, which has a high concentration of technology stocks, tumbled 316 points, or 4.1 percent, to 7,422.

The S&P 500 index sank 95 points, or 3.3 percent, to 2,786, its fifth straight drop. That hasn’t happened since right before the 2016 presidential election. Every one of the 11 S&P 500 sectors finished down for the day.

Microsoft dropped 5.4 percent to $106.16. Amazon skidded 6.2 percent to $1,755.25. Industrial and internet companies also fell hard. Boeing lost 4.7 percent to $367.47 and Alphabet, Google’s parent company, gave up 5 percent to $1,081.22.

After a long stretch of relative calm, the stock market has suffered sharp losses over the last week as bond yields surged.

Squeezed margins

Gina Martin Adams, the chief equity strategist for Bloomberg Intelligence, said investors are concerned about the big increase in yields, which makes it more expensive to borrow money. She said they also fear that company profit margins will be squeezed by rising costs, including the price of oil.

Paint and coatings maker PPG gave a weak third-quarter forecast Monday, while earlier, Pepsi and Conagra’s quarterly reports reflected increased expenses.

“Both companies highlighted rising costs, not only input costs but increasing operating expenses [and] marketing expenses,” she said.

Insurance companies dropped as Hurricane Michael continued to gather strength and came ashore in Florida bringing winds of up to 155 mph. Berkshire Hathaway dipped 4.8 percent to $213.10 and reinsurer Everest Re slid 5.1 percent to $217.73.

Luxury retailers tumbled. Tiffany plunged 10.2 percent to $110.38 and Ralph Lauren fell 8.4 percent to $116.96.

The biggest driver for the market over the last week has been interest rates, which began spurting higher following several encouraging reports on the economy. Higher rates can slow economic growth, erode corporate profits and make investors less willing to pay high prices for stocks. 

The 10-year Treasury yield rose to 3.22 percent from 3.20 percent late Tuesday after earlier touching 3.24 percent. It was at just 3.05 percent early last week.

Technology and internet-based companies are known for their high profit margins, and many have reported explosive growth in recent years, with corresponding gains in their stock prices. Adams, of Bloomberg Intelligence, said investors have concerns about their future profitability, too.

That’s helped make technology stocks more volatile in the last few months.

“As stocks go up, tech goes up more than the stock market. As stocks go down, tech goes down more than the stock market,” she said.

$1*/ mo hosting! Get going with us!

Dow Drops 800-Plus Points as US Stocks Dip Sharply

U.S. stocks posted their worst loss since February on Wednesday, the Dow Jones industrial average finishing the day down more than 800 points.

The losses were widespread as bond yields remained high after steep increases last week. Companies that have been the biggest winners on the market the last few years, including technology companies and retailers, suffered steep declines.

The Dow gave up nearly 828 points, or 3.15 percent, to 25,600. The Nasdaq composite, which has a high concentration of technology stocks, tumbled 316 points, or 4.1 percent, to 7,422.

The S&P 500 index sank 95 points, or 3.3 percent, to 2,786, its fifth straight drop. That hasn’t happened since right before the 2016 presidential election. Every one of the 11 S&P 500 sectors finished down for the day.

Microsoft dropped 5.4 percent to $106.16. Amazon skidded 6.2 percent to $1,755.25. Industrial and internet companies also fell hard. Boeing lost 4.7 percent to $367.47 and Alphabet, Google’s parent company, gave up 5 percent to $1,081.22.

After a long stretch of relative calm, the stock market has suffered sharp losses over the last week as bond yields surged.

Squeezed margins

Gina Martin Adams, the chief equity strategist for Bloomberg Intelligence, said investors are concerned about the big increase in yields, which makes it more expensive to borrow money. She said they also fear that company profit margins will be squeezed by rising costs, including the price of oil.

Paint and coatings maker PPG gave a weak third-quarter forecast Monday, while earlier, Pepsi and Conagra’s quarterly reports reflected increased expenses.

“Both companies highlighted rising costs, not only input costs but increasing operating expenses [and] marketing expenses,” she said.

Insurance companies dropped as Hurricane Michael continued to gather strength and came ashore in Florida bringing winds of up to 155 mph. Berkshire Hathaway dipped 4.8 percent to $213.10 and reinsurer Everest Re slid 5.1 percent to $217.73.

Luxury retailers tumbled. Tiffany plunged 10.2 percent to $110.38 and Ralph Lauren fell 8.4 percent to $116.96.

The biggest driver for the market over the last week has been interest rates, which began spurting higher following several encouraging reports on the economy. Higher rates can slow economic growth, erode corporate profits and make investors less willing to pay high prices for stocks. 

The 10-year Treasury yield rose to 3.22 percent from 3.20 percent late Tuesday after earlier touching 3.24 percent. It was at just 3.05 percent early last week.

Technology and internet-based companies are known for their high profit margins, and many have reported explosive growth in recent years, with corresponding gains in their stock prices. Adams, of Bloomberg Intelligence, said investors have concerns about their future profitability, too.

That’s helped make technology stocks more volatile in the last few months.

“As stocks go up, tech goes up more than the stock market. As stocks go down, tech goes down more than the stock market,” she said.

$1*/ mo hosting! Get going with us!

In Boon for Farmers, Trump to Lift Restrictions on Ethanol

The Trump administration is moving to allow year-round sales of gasoline with higher blends of ethanol, a boon for Iowa and other farm states that have pushed for greater sales of the corn-based fuel.

President Donald Trump was expected to announce he will lift a federal ban on summer sales of high-ethanol blends during a trip to Iowa on Tuesday.

“It’s an amazing substance. You look at the Indy cars. They run 100 percent on ethanol,” Trump said at the White House before he left for Iowa.

He said he wanted more industry and more energy and he wanted to help farmers and refiners.

‘I want low prices’

“I want more because I don’t like $74,” Trump said referring to the current price of a barrel of crude oil. “It’s up to $74. And if I have to do more — whether it’s through ethanol or another means — that’s what I want. I want low prices.”

The long-expected announcement is something of a reward to Iowa Sen. Chuck Grassley, who as Senate Judiciary Committee chairman led a contentious but successful fight to confirm Brett Kavanaugh to the Supreme Court. The veteran Republican lawmaker is the Senate’s leading ethanol proponent and sharply criticized the Trump administration’s proposed rollback in ethanol volumes earlier this year.

At that time Grassley threatened to call for the resignation of the Environmental Protection Agency’s chief, Scott Pruitt, if Pruitt did not work to fulfill the federal ethanol mandate. Pruitt later stepped down amid a host of ethics investigations.

A senior administration official said Monday that the EPA would publish a rule in coming days to allow high-ethanol blends as part of a package of proposed changes to the ethanol mandate. The official spoke on condition of anonymity ahead of Trump’s announcement.

The change would allow year-round sales of gasoline blends with up to 15 percent ethanol. Gasoline typically contains 10 percent ethanol.

The EPA currently bans the high-ethanol blend, called E15, during the summer because of concerns that it contributes to smog on hot days, a claim ethanol industry advocates say is unfounded.

In May, Republican senators, including Grassley, announced a tentative agreement with the White House to allow year-round E15 sales, but the EPA did not propose a formal rule change.

The senior administration official said the proposed rule intends to allow E15 sales next summer. Current regulations prevent retailers in much of the country from offering E15 from June 1 to Sept. 15.

Lifting the summer ban is expected to be coupled with new restrictions on trading biofuel credits that underpin the federal Renewable Fuel Standard, commonly known as the ethanol mandate. The law sets out how much corn-based ethanol and other renewable fuels refiners must blend into gasoline each year.

Production misses mark

The Renewable Fuel Standard was intended to address global warming, reduce dependence on foreign oil and bolster the rural economy by requiring a steady increase in renewable fuels over time. The mandate has not worked as intended, and production levels of renewable fuels, mostly ethanol, routinely fail to reach minimum thresholds set in law.

The oil industry opposes year-round sales of E15, warning that high-ethanol gasoline can damage car engines and fuel systems. Some carmakers have warned against high-ethanol blends, though EPA has approved use of E15 in all light-duty vehicles built since 2001.

A bipartisan group of lawmakers, many from oil-producing states, sent Trump a letter last week opposing expanded sales of high-ethanol gas. The lawmakers called the approach “misguided” and said it would do nothing to protect refinery jobs and “could hurt millions of consumers whose vehicles and equipment are not compatible with higher-ethanol blended gasoline.”

The letter was signed by 16 Republicans and four Democrats, including Texas Sen. John Cornyn, the No. 2 Republican in the Senate, and Utah Sen. Orrin Hatch, a key Trump ally. New Jersey Democratic Sen. Robert Menendez, whose state includes several refineries, also signed the letter.

A spokeswoman for the Renewable Fuels Association, an ethanol industry trade group, said allowing E15 to be sold year-round would give consumers greater access to clean, low-cost, higher-octane fuel while expanding market access for ethanol producers.

“The ability to sell E15 all year would also bring a significant boost to farmers across our country” and provide a significant economic boost to rural America, said spokeswoman Rachel Gantz.

$1*/ mo hosting! Get going with us!

In Boon for Farmers, Trump to Lift Restrictions on Ethanol

The Trump administration is moving to allow year-round sales of gasoline with higher blends of ethanol, a boon for Iowa and other farm states that have pushed for greater sales of the corn-based fuel.

President Donald Trump was expected to announce he will lift a federal ban on summer sales of high-ethanol blends during a trip to Iowa on Tuesday.

“It’s an amazing substance. You look at the Indy cars. They run 100 percent on ethanol,” Trump said at the White House before he left for Iowa.

He said he wanted more industry and more energy and he wanted to help farmers and refiners.

‘I want low prices’

“I want more because I don’t like $74,” Trump said referring to the current price of a barrel of crude oil. “It’s up to $74. And if I have to do more — whether it’s through ethanol or another means — that’s what I want. I want low prices.”

The long-expected announcement is something of a reward to Iowa Sen. Chuck Grassley, who as Senate Judiciary Committee chairman led a contentious but successful fight to confirm Brett Kavanaugh to the Supreme Court. The veteran Republican lawmaker is the Senate’s leading ethanol proponent and sharply criticized the Trump administration’s proposed rollback in ethanol volumes earlier this year.

At that time Grassley threatened to call for the resignation of the Environmental Protection Agency’s chief, Scott Pruitt, if Pruitt did not work to fulfill the federal ethanol mandate. Pruitt later stepped down amid a host of ethics investigations.

A senior administration official said Monday that the EPA would publish a rule in coming days to allow high-ethanol blends as part of a package of proposed changes to the ethanol mandate. The official spoke on condition of anonymity ahead of Trump’s announcement.

The change would allow year-round sales of gasoline blends with up to 15 percent ethanol. Gasoline typically contains 10 percent ethanol.

The EPA currently bans the high-ethanol blend, called E15, during the summer because of concerns that it contributes to smog on hot days, a claim ethanol industry advocates say is unfounded.

In May, Republican senators, including Grassley, announced a tentative agreement with the White House to allow year-round E15 sales, but the EPA did not propose a formal rule change.

The senior administration official said the proposed rule intends to allow E15 sales next summer. Current regulations prevent retailers in much of the country from offering E15 from June 1 to Sept. 15.

Lifting the summer ban is expected to be coupled with new restrictions on trading biofuel credits that underpin the federal Renewable Fuel Standard, commonly known as the ethanol mandate. The law sets out how much corn-based ethanol and other renewable fuels refiners must blend into gasoline each year.

Production misses mark

The Renewable Fuel Standard was intended to address global warming, reduce dependence on foreign oil and bolster the rural economy by requiring a steady increase in renewable fuels over time. The mandate has not worked as intended, and production levels of renewable fuels, mostly ethanol, routinely fail to reach minimum thresholds set in law.

The oil industry opposes year-round sales of E15, warning that high-ethanol gasoline can damage car engines and fuel systems. Some carmakers have warned against high-ethanol blends, though EPA has approved use of E15 in all light-duty vehicles built since 2001.

A bipartisan group of lawmakers, many from oil-producing states, sent Trump a letter last week opposing expanded sales of high-ethanol gas. The lawmakers called the approach “misguided” and said it would do nothing to protect refinery jobs and “could hurt millions of consumers whose vehicles and equipment are not compatible with higher-ethanol blended gasoline.”

The letter was signed by 16 Republicans and four Democrats, including Texas Sen. John Cornyn, the No. 2 Republican in the Senate, and Utah Sen. Orrin Hatch, a key Trump ally. New Jersey Democratic Sen. Robert Menendez, whose state includes several refineries, also signed the letter.

A spokeswoman for the Renewable Fuels Association, an ethanol industry trade group, said allowing E15 to be sold year-round would give consumers greater access to clean, low-cost, higher-octane fuel while expanding market access for ethanol producers.

“The ability to sell E15 all year would also bring a significant boost to farmers across our country” and provide a significant economic boost to rural America, said spokeswoman Rachel Gantz.

$1*/ mo hosting! Get going with us!