Wall Street and the dollar tumble as investors retreat further from the United States

By The Associated Press
 April 21, 2025 

Traders at the New York Stock Exchange. Photographer: Michael Nagle/Bloomberg (Michael Nagle/Bloomberg)

NEW YORK — Wall Street weakened Monday as investors worldwide get more skeptical about U.S. investments because of U.S. President Donald Trump’s trade war and his criticism of the Federal Reserve, which are shaking the traditional order.

The S&P 500 sank 2.4% in another wipeout. That yanked the index that’s at the center of many 401(k) accounts 16% below its record set two months ago.Trade War coverage on BNNBloomberg.ca

The Dow Jones Industrial Average dropped 971 points, or 2.5%, while losses for Tesla and Nvidia helped drag the Nasdaq composite down 2.6%.

Perhaps more worryingly, U.S. government bonds and the value of the U.S. dollar also sank as prices retreated across U.S. markets. It’s an unusual move because Treasurys and the dollar have historically strengthened during episodes of nervousness. This time around, though, it’s policies directly from Washington that are causing the fear and potentially weakening their reputations as some of the world’s safest investments.

Trump continued his tough talk on global trade as economists and investors continue to say his stiff proposed tariffs could cause a recession if they’re not rolled back. U.S. talks last week with Japan failed to reach a quick deal that could lower tariffs and protect the economy, and they’re seen as a “test case,” according to Thierry Wizman, a strategist at Macquarie.

“The golden rule of negotiating and success: He who has the gold makes the rules,” Trump said in all capitalized letters on his Truth Social Network. He also said that “the businessmen who criticize tariffs are bad at business, but really bad at politics,” likewise in all caps.

Trump has recently focused more on China, the world’s second-largest economy, which has also been keeping up its rhetoric. China on Monday warned other countries against making trade deals with the United States “at the expense of China’s interest” as Japan, South Korea and others try to negotiate agreements.

“If this happens, China will never accept it and will resolutely take countermeasures in a reciprocal manner,” China’s Commerce Ministry said in a statement.

Also hanging over the market are worries about Trump’s anger at Federal Reserve Chair Jerome Powell. Trump last week criticized Powell again for not cutting interest rates sooner to give the economy more juice.

The Fed has been resistant to lowering rates too quickly because it does not want to allow inflation to reaccelerate after slowing nearly all the way down to its 2% goal from more than 9% three years ago.

Trump talked Monday about a slowdown for the U.S. economy that could be coming unless “Mr. Too Late, a major loser, lowers interest rates, NOW.”

A move by Trump to fire Powell would likely send a bolt of fear through financial markets. While Wall Street loves lower rates, largely because they boost stock prices, the bigger worry would be that a less independent Fed would be less effective at keeping inflation under control. Such a move could further weaken, if not kill, the United States’ reputation as the world’s safest place to keep cash.

All the uncertainty striking pillars at the center of financial markets means some investors say they’re having to rethink the fundamentals of how to invest.

“We can no longer extrapolate from past trends or rely on long-term assumptions to anchor portfolios,” strategists at BlackRock Investment Institute said in a report. “The distinction between tactical and strategic asset allocation is blurred. Instead, we need to constantly reassess the long-term trajectory and be dynamic with asset allocation as we learn more about the future state of the global system.”

That in turn could push investors outside the United States to keep more of their money in their home markets, according to the strategists led by Jean Boivin.


On Wall Street, Big Tech stocks helped lead indexes lower ahead of their latest earnings reports due later this week.

Tesla sank 5.7%. The electric vehicle maker’s stock has more than halved from its record set in December on criticism that the stock price had gone too high and that CEO Elon Musk’s role in leading the U.S. government’s efforts to cut spending is damaging the brand.

Nvidia fell 4.5% for a third straight drop after disclosing that U.S. export limits on chips to China could hurt its first-quarter results by $5.5 billion.

They led another wipeout on Wall Street, and 92% of the stocks within the S&P 500 fell.

Among the few gainers were Discover Financial Services and Capital One Financial, which climbed after the U.S. government approved their proposed merger. Discover rose 3.6%, while Capital One added 1.5%.

All told, the S&P 500 fell 124.50 points to 5,158.20. The Dow Jones Industrial Average dropped 971.82 to 38,170.41, and the Nasdaq composite tumbled 415.55 to 15,870.90.

Gold also climbed to burnish its reputation as a safe-haven investment, unlike some others.

In the bond market, shorter-term Treasury yields fell as investors expect the Fed to cut its main overnight interest rate later this year to support the economy.

But longer-term yields rose with doubts about the United States’ standing in the global economy. The yield on the 10-year Treasury climbed to 4.40%, up from 4.34% at the end of last week and from just about 4% earlier this month. That’s a substantial move for the bond market.

The U.S. dollar’s value, meanwhile, fell against the euro, Japanese yen, the Swiss franc and other currencies.

___

AP Business writer Elaine Kurtenbach contributed.

Stan Choe, The Associated Press

Fossil Fuel Billionaires are Cashing In on Trump

Chuck Collins

 January 24, 2025
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Photograph by Nathaniel St. Clair

As he left office, President Biden warned of an emerging oligarchy in this country — rule by and for a small number of wealthy people and corporations.

After donating heavily to President Trump’s campaign, the fossil fuel industry in particular has already begun to reap return on their investments. Welcome to the age of “Oil-Garchy.”

Trump has nominated some of the most vociferous climate deniers and advocates for the oil, gas, and coal industries for key positions overseeing the environment, energy, and public lands. He picked former Rep. Lee Zeldin, a climate denialist, to run the Environmental Protection Agency and Chris Wright, CEO of fracking company Liberty Energy, to oversee the Energy Department.

Meanwhile the top 15 fossil fuel industry billionaires have already seen their personal combined wealth rise from $267.6 billion to $307.9 billion — a gain of over $40 billion, or 15.2 percent — since April 2024.

The Climate Accountability Research Project (CARP) released its first monthly tracking report, Pipeline to Power: Trump and the “Oil-garch” Wealth Surge, that will monitor wealth gains and losses by top billionaires in the sector over the coming year. According to the report, the first wave of big wealth gainers include fossil fuel CEOs and scions of billionaire families like the Kochs.

For these billionaires, it’s time to cash in.

On April 11, 2024, the CEOs and leaders of the oil and gas industries gathered at Mar-A-Lago for a meeting with then-candidate Trump about energy policy.

Trump used the occasion, according to witnesses, to make a brazen transactional pitch: raise $1 billion for his campaign and he would do their bidding. Trump told the assembled that the billions they would save in taxes and legal expenses after he repealed regulations would more than cover their billion-dollar contribution.

Already, Trump is moving to expand offshore drilling, weaken environmental rules, scrap electric vehicles, and stop new wind projects, among other policies opposed by the industry groups. Trump also vowed to reverse President Biden’s pause on new LNG exports.

Present at the Mar-a-Lago Club on that April day were industry leaders such as Harold Hamm, the wildcat fracker and chairman of Continental Resources, who played an influential role in Trump’s first administration. Also present was Doug Burgum, governor of North Dakota and Trump’s nominee to Interior Secretary, a position overseeing gas leases on public lands.

Other attendees included leaders from the American Petroleum Institute and executives from Chevron, ExxonMobil, and ConocoPhillips, along with fracking producers Cheniere Energy and EQT.

Hamm and Vicki Hollub, CEO of Occidental Petroleum, organized donors within the fossil fuel sector to support Trump and funnel money to his campaign. They didn’t raise a billion dollars, but they helped move hundreds of millions to PACs supporting Trump and directly to the candidate.

According to Climate Connections at Yale University, the fossil fuel industry spent $219 million to influence the new U.S. government, including $26 million in direct oil and gas industry contributions to (mostly) Republican lawmakers and nearly $23 million in oil and gas industry funds went directly to Trump and his PACs.

No wonder Hamm just hosted an exclusive inauguration watch party for fossil fuel executives to celebrate Trump’s re-election.

If the last few years taught us anything, it’s that record levels of oil production and fossil fuel profits don’t lead to better prices for consumers — and they come with the additional price of climate chaos for our communities.

This is what “Oil-garchy” looks like. And we all need to stand up to it.

You can see the whole report at www.climatecriminals.org.

Chuck Collins directs the Program on Inequality and the Common Good at the Institute for Policy Studies, where he also co-edits Inequality.org.

Fiscal Transfers to Capitalists Are Counter-Productive

Prabhat Patnaik | 23 Nov 2024  NEWSCLICK INDIA

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Far from reviving the economy, transfers to capitalists in a neo-liberal regime have the effect of further contracting the economy.

It is common for governments these days to provide fiscal transfers to capitalists, whether through reduced corporate tax rates, or by providing direct cash subsidies, to encourage greater investment by them and thereby stimulate the economy. During Donald Trump’s first presidency there had been a cut in corporate tax rate in the US with this objective in mind.

In India, the Narendra Modi government, as is well-known, has given massive tax concessions with the same objective. Even a minimum knowledge of economics, however, would show that such transfers to capitalists are counter-productive in a neoliberal regime.

This is because such a regime is characterised by “fiscal responsibility” legislation that fixes the upper limit to the fiscal deficit as a percentage of the gross domestic product, and normally the government operates at this ceiling. Transfers to the capitalists, therefore, have to be matched by reductions in expenditure elsewhere, typically in welfare expenditures undertaken for the working poor, or by an equivalent increase in tax revenue garnered from the working poor.

Now, the effect of handing over, say, Rs 100 to the capitalists by reducing transfers to the workers by Rs 100, is to reduce the level of aggregate demand and hence employment and output. Far from reviving the economy, transfers to capitalists have the effect of further contracting the economy. The way in which this comes about is the following.

Investment undertaken in any period is the result of investment orders given earlier, and hence of investment decisions taken in the past; this is so because investment projects have long gestation periods and it is as true of private investment as of public investment. If the tempo of investment is to be stepped up, then a decision for doing so will be taken in the current period and the actual tempo will increase only subsequently. Hence investment in any period must be taken as a given magnitude that does not change during the period in question.

What does change during the period in question is the level of consumption; and here, because the workers consume a higher share of their incomes than the capitalists, any shift of purchasing power from workers to capitalists has the effect of lowering consumption (the same happens if the government reduces its consumption in order to make transfers to capitalists).

What is more, transfers from workers to capitalists (and even from the government to capitalists) have the effect of reducing net exports (that is, the excess of exports over imports), since capitalists’ consumption is more import-intensive. But let us deliberately understate our argument by assuming that transfers to capitalists, that are financed at the expense of the workers, do not change net exports. Since the gross national income, Y, of a country must equal the sum of consumption C, investment I, government expenditure G, and the surplus on the current account of its balance of payments (X-M), that is,

 Y = C+ I + G + (X-M)        ……              (i)   

transfers to capitalists, by lowering C, lower the right-hand side, which depicts the level of aggregate demand.

The equality in the above equation, therefore, can be restored only through a fall in Y, that is, through a reduction in output and employment.

When this happens, the degree of unutilised capacity in the economy increases, which has the effect of lowering the investment decisions of the capitalists taken in the current period and hence their actual investment in the subsequent period. The economy, therefore, far from getting stimulated, actually contracts.

But the story does not end there. Any such contraction in itself, that is, if other things remain the same, has the effect of reducing profits. Thus, while transfers to capitalists as such, have the effect of increasing profits, the fact that such transfers are obtained by reducing the purchasing power of the workers, have the opposite effect, of reducing profits. And under fairly realistic assumptions, these two effects cancel each other out exactly, so that total profits of the capitalists remain exactly the same as would have obtained without the transfers. The assumption under which this result holds is that the working people consume their entire income.

This is a fairly realistic assumption because the proportion of the total wealth of the economy that is owned by the bottom segment of the population is quite minuscule. In India, for instance, the bottom 50% own only 2% of the total wealth of the country. Since all wealth necessarily arises from savings, this only shows that they scarcely save anything at all. Hence our assumption that the working people do not save and that the entire savings in the economy come from the rich, apart from the government, is quite realistic.

Let us, only for a moment, assume that the rich, in this case the capitalists, save their entire income; then private savings equal profits. Since in any economy, total domestic savings must equal total domestic investment minus the inflow of foreign savings, and since government investment minus government savings is what is called the fiscal deficit, this amounts to saying that private savings, and hence profits, in the economy, must necessarily equal private investment plus the fiscal deficit minus foreign savings F coming into the economy during the period; that is,

Profits = Private Investment + Fiscal Deficit – F …(ii)

Since we have argued that private investment and the inflow of foreign savings (which is the just the negative of X-M above) will remain unchanged during the period, as will the fiscal deficit because of the “fiscal responsibility” legislation, profits must remain the same despite the transfers to capitalists.

Dropping the assumption that all profits are saved makes no difference to the above argument. If a proportion α of profits is saved, then equation (ii) simply becomes:

α. Profits = Private Investment + Fiscal Deficit – F… (iii)

If the right-hand side of (iii) remains unchanged, for reasons we have just discussed, then profits must also remain unchanged even if α is not equal to one. Budgetary transfers to the capitalists in short, in a neoliberal regime where the fiscal deficit cannot be increased to finance such transfers and where, therefore, workers’ incomes have to be reduced correspondingly, have the effect not only of precipitating a contraction in output and employment, but of not even increasing the magnitude of capitalists’ income if the workers consume their entire income.

Budgetary transfers to the capitalists in other words cause inequality to increase in an economy without even increasing the capitalists’ income, because they cause an output contraction that negates the profit-increasing effects of such transfers.

They do, however, have one other important effect which is the real reason why the government resorts to them, and that is to change the distribution of profits among the capitalists in favour of the monopoly stratum, away from non-monopoly capitalists. This is so for the following reason. We have seen that total profits remain unchanged despite budgetary transfers to capitalists because while transfers are an addition to profits, the fact that they are associated with taking away incomes from the workers, and reducing aggregate demand, lowers profits to an exactly equal extent; but while this is true in the aggregate, the capitalists who face reduced demand and the capitalists to whom the bulk of the transfers accrue are not the same. In particular, large capitalists are not affected much by the reduction in workers’ consumption demand; but they get the lion’s share of the budgetary transfers. They are, therefore, net gainers, while smaller capitalists whose presence is more pronounced in the market for workers’ consumption goods, become net losers, even when total profits remain unchanged at the aggregate level.

Budgetary transfers to the capitalists are thus a means of aiding what Marx had called “centralisation of capital”, of hastening the replacement of smaller capitals (or even petty producers who produce goods for workers’ consumption) by large capitals. This is what its “crony capitalists” want and the government obliges them. Such transfers are undertaken in the name of stimulating the economy, but they do nothing of the sort; on the contrary they succeed only in contracting the economy, but even in such a contracting economy, they strengthen the position of the monopoly capitalists.

There is some recognition in the media and among Opposition parties that small producers in the country were harmed by demonetisation and the introduction of the Goods and Services Tax. There is, however, less recognition of the harm done to them by the tax concessions and other forms of budgetary transfers made to the capitalists.

Prabhat Patnaik is Professor Emeritus, Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi. The views are personal.

Hurricanes and Boeing Strike Depress Job Growth, But Unemployment Remains Steady

Dean Baker

November 6, 2024
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The October jobs report showed little gain in hiring, with establishments adding just 12,000 jobs. The number was depressed both by the effects of the hurricanes that hit the South last month and the loss of roughly 33,000 jobs due to the strike at Boeing. The economy has now added 15.3 million jobs since President Biden took office in January of 2021. We now have 5.9 million more jobs than at the pre-pandemic peak. (These numbers adjust for the BLS preliminary benchmark revision.)

The unemployment rate remained at 4.1 percent as hiring apparently offset any hurricane-related layoffs. The hurricanes make it more difficult to gauge the underlying strength of the labor market, but the growth would clearly have been far more rapid without the unusual events hitting the economy in October.

It is also worth noting that the response rate to the establishment survey was extraordinarily low at 47.4 percent. It is typically close to 60.0 percent, which suggests there could be large revisions when we get fuller data in the next two months.

Hurricanes Likely Hit Job Growth Primarily in Construction and Restaurants

The direct impact of the Boeing strike is easy to measure since we know the number of striking workers. (The indirect effect on supplier industries is more difficult.) The hurricanes would have both prevented hiring in some sectors and also led to some layoffs in businesses that were closed due to the storms.

It seems clear construction employment was affected by the hurricanes, as the sector created just 8,000 jobs in October after averaging almost 20,000 jobs a month in the year to September. This weakness was driven largely by a drop of 6,600 jobs in residential specialty trade contractors

Other industries likely affected by the hurricanes include restaurant jobs, where just 3,700 jobs were added compared to an average of more than 12,000 a month in the year to September. Also, amusement, gambling, and recreation which lost 7,400 jobs, and the loss of 6,400 jobs in the retail sector.

Adding in these effects, it seems likely that we would have seen at least 100,000 jobs added in October without the impact of the strike and the hurricane.

Healthcare Sector Again Led Employment Growth

The healthcare sector added 52,300 jobs in October, slightly less than the average growth of 58,000 over the year to September. The other big job gainers were state governments, which added 18,000 jobs and local governments, which added 21,000 jobs.

The government sector did not recover the jobs lost in the pandemic until September of 2023. The private sector had regained the lost jobs by April of 2022. Employment in the government sector is now 590,000, or 2.6 percent, above its pre-pandemic level.

Manufacturing Lost 46,000 Jobs, Mostly Due to Boeing Strike

The job loss in manufacturing was driven primarily by the 33,000 striking workers at Boeing. There was a drop in employment in the metal industries of 5,400, which was likely due at least in part to the strike. There was a decline in employment of 6,000 in the motor vehicle industry, although employment in the sector is still 31,500 higher than in October of 2023.

Wage Growth Remains Solid

One factor offsetting concerns about labor market weakness is that we continue to see strong wage growth. Wages have risen 4.0 percent over the previous 12 months. The pace actually accelerated slightly over the last three months, with the annualized rate of wage growth of 4.5 percent. With the rate of inflation falling towards 2.0 percent, this means that workers are seeing healthy real wage gains.

Little Change in Average Hours

Some of us expected a drop in the length of the average workweek as a result of businesses being closed by the storms. This seems not to have been the case. There was no change in the length of the average workweek or the index of aggregate weekly hours. There was a drop in the index of aggregate weekly hours for production workers, but this was driven entirely by a drop in manufacturing and construction; the index for the service sector was unchanged. It is also worth noting involuntary part-time employment actually fell somewhat in the month, hitting its lowest level since June.

Prime Age Employment Rates Fell in October

The employment to population ratios (EPOP) for prime age workers (ages 25 to 54), which had been near its all-time high, fell 0.3 percentage points to 80.6 percent. The drop was driven mostly by a 0.6 percentage point drop in the prime age EPOP for women to 74.9 percent. This is still above the pre-pandemic peak. The EPOP for men edged down 0.1 percentage point to 86.3 percent.

Share of Unemployment Due to Voluntary Quits Falls

The share of unemployment due to people leaving their job fell from 12.1 percent to 11.5 percent. The small number of people changing jobs is one of the anomalies in the current labor market. With an unemployment rate near 4.0 percent, we would expect this share to be above 14.0 percent.

We know from the JOLTS data that layoffs are relatively low, so it doesn’t seem workers have much fear of losing jobs at present. It’s possible that with the huge round of job changes earlier in the recovery workers are more satisfied with their jobs than in the past. Also we have a relatively older workforce now, and workers are less likely to change jobs in their forties and fifties than in their twenties and thirties, but this is one of the anomalies in the current labor market.

Black Unemployment Steady at 5.7 Percent

The Black unemployment rate was unchanged in October. The 5.7 percent rate in October is 0.7 pp below the recent high of 6.4 percent rate in March, but still 0.9 percent above the all-time low hit in April of 2023. It is slightly above the pre-pandemic lows.

The unemployment rate for Hispanics was unchanged at 5.1 percent. This is 1.1 pp above the all-time low of 4.0 percent in November of 2022.

Mostly Bright Picture, but Hurricanes Make it Hard to Read

This is the last major data release before the election. The economy’s performance under the Biden-Harris administration has been remarkable by most standard measures. The pandemic inflation that drove prices higher across the globe has been brought down and is now nearly back to the Fed’s 2.0 percent inflation target. With wage growth near 4.0 percent, wages are now outpacing prices by a substantial amount.

Clearly much of the weakness in the establishment survey is attributable to the hurricanes. It’s also not clear how many jobs we should be creating at this point. Before the pandemic, the Congressional Budget Office projected we would create just 20,000 jobs a month in 2024, as baby boomers retired in large numbers. The surge in immigration changed that picture, but with immigration now slowed, we will surely see much slower job growth ahead than earlier in the recovery.

This first appeared on Dean Baker’s Beat the Press blog.

Dean Baker is the senior economist at the Center for Economic and Policy Research in Washington, DC.