Wellspring | July 1, 2019

A weekly summary of news, analysis and data shaping the market.
Powell: Fed Is ‘Grappling’ With Whether to Cut Interest Rates

Federal Reserve Chairman Jerome Powell on Tuesday suggested that an interest-rate cut in July, widely expected by investors and economists, is not a done deal. While greater uncertainty about trade and worries about global economy might be starting to show through to economic data, officials don’t know how long this may last and how serious the drag might be, the Fed chairman said. “The question my colleagues and I are grappling with is whether these uncertainties will continue to weigh on the outlook and thus call for additional policy accommodation,” Powell said, in brief remarks ahead of a moderated discussion at the Council on Foreign Relations in New York.

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America’s Housing Recovery Suffers a Setback

U.S. private residential construction spending has dropped more than 11% since April 2018 in response to falling demand. Recent data on new-home sales, published on Tuesday by the U.S. Census Bureau, suggest this process should soon reverse, although at a slightly slower pace than implied by last month’s figures. Americans have bought 302,000 new single-family homes so far this year, compared with 291,000 new homes in the first five months of 2018. The 4% annual increase is smaller than in previous years, but nevertheless represents an impressive performance considering that new-home sales fell by more than 13%, at an annual rate, between the end of 2017 and the end of 2018. More homes were purchased in the first five months of 2019 than in any year since 2007, although demand is still much lower than it was during the 1996-2006 boom.

Companies Dodge U.S. Tariffs on China by Rerouting Goods

Billions of dollars worth of China-made goods subject to tariffs by the Trump administration in its trade fight with Beijing are dodging the China levies by entering the U.S. via other countries in Asia, especially Vietnam, according to trade data and overseas officials. The Trump administration has for more than a year sought to weed out the practice known as transshipment, in which Chinese exports typically are minimally processed or altered during a brief stop in a third port and then re-exported as a product originating from the third port. Such circumvention threatens to crimp U.S. plans as it prepares to add tariffs on $300 billion of Chinese exports, from toys to electronics, essentially covering all its China trade. The U.S. already has placed 25% tariffs on some $200 billion of Chinese exports.

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YouTube Content for Children Should Be Barred, Advocacy Groups Tell FTC

Privacy advocates are calling on the Federal Trade Commission to remove all YouTube content directed at kids and impose tens of billions in fines against the video-streaming service run by Alphabet Inc.’s Google unit for alleged children’s privacy violations. The recommendations were made in a letter sent to the FTC Tuesday by the Campaign for a Commercial-Free Childhood and the Center for Digital Democracy. Those groups filed a complaint last year against Google and YouTube over their privacy practices regarding children, which the FTC is investigating.

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Is There a Big Short in Bitcoin?

Hedge funds and other big traders are betting that Bitcoin will fall, even as the digital currency has risen above $11,000 on a new wave of crypto-optimism. That is the picture that emerges from Bitcoin futures listed on CME Group Inc., the biggest U.S. exchange operator. Futures are contracts that let traders bet on whether an asset—in this case, Bitcoin—will rise or fall.

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Charitable giving dropped last year in the wake of the new tax law

Americans gave less to charity in 2018 than a year earlier, following changes in the tax law and fourth-quarter declines in the stock market, according to a new report.

Charitable giving by individuals America fell 1.1% to $292 billion in 2018 compared with 2017, according to Giving USA. Because giving by foundations and companies increased, total giving in the U.S. increased slightly, by 0.7%, to $428 billion.

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