Tag Archives: high prices

Labor Department says Inflation rose in November

Revelations 18:23:’For the merchants were the great men of the earth; for by thy sorceries were all nations deceived.’

Important Takeaways:

  • Wholesale inflation rises faster than expected in November as high prices persist
  • The Labor Department said inflation at the wholesale level before it reaches consumers, rose 0.3% in November from the previous month. On an annual basis, prices soared 7.4%
  • That is down from the 8% reading recorded in October and marks the lowest reading since May 2021.
  • The CPI, which will be released next Tuesday at 8:30 a.m. ET, is expected to be another doozy: Economists surveyed by Refinitiv anticipate that inflation rose 7.8% in November, up slightly from the 7.7% in October.

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Bank of International Settlements says were at the ‘tipping point’ to stop runaway inflation

Rev 6:6 NAS “And I heard something like a voice in the center of the four living creatures saying, “A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not damage the oil and the wine.”

Important Takeaways:

  • World is on ‘tipping point’ of permanently high prices
  • The global economy has reached a “tipping point” where it may be impossible to stop runaway inflation, the world’s top central banker warned, as the war in Ukraine and a US slowdown leaves Britain on the brink of recession.

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U.S. to release oil from reserves after OPEC+ rebuffs call for more crude

By Timothy Gardner

WASHINGTON (Reuters) -The United States said on Tuesday it would release millions of barrels of oil from strategic reserves in coordination with China, India, South Korea, Japan and Britain to cool prices after OPEC+ producers repeatedly ignored calls for more crude.

U.S. President Joe Biden, facing low approval ratings amid rising inflation ahead of next year’s congressional elections, has repeatedly asked the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to pump more oil.

Tuesday’s announcement that the U.S. would release 50 million barrels was made after an official said Washington had approached major Asian energy consumers to help to drive down oil prices from near three-year highs. Britain had not previously been mentioned as being involved.

It was the first time Washington had coordinated such a move with some of the world’s largest oil consumers, officials said.

OPEC+, which includes Saudi Arabia and other U.S. allies in the Gulf, as well as Russia, has rebuffed requests to pump more at its monthly meetings. It meets again on Dec. 2 to discuss policy but has so far shown no indication it will change tack.

The group has been struggling to meet existing targets under its agreement to gradually increase production by 400,000 barrels per day (bpd) each month – a pace Washington sees as too slow – and it remains worried that a resurgence of coronavirus cases could once again drive down demand.

Current high prices have been caused by a sharp rebound in global demand, which cratered last year, early in the pandemic.

TALKING WITH PARTNERS

The release from the U.S. Strategic Petroleum Reserve would be in a loan and a sale to companies, U.S. officials said. The 32 million barrels loan will take place over the next several months, while the administration would accelerate a release of 18 million barrels in sales already approved by Congress.

“We will continue talking to international partners on this issue. The president stands ready to take additional action if needed, and is prepared to use his full authorities working in coordination with the rest of the world,” a senior U.S. administration official told reporters.

India said in a statement it would release 5 million barrels, while Britain said it would allow the voluntary release of 1.5 million barrels of oil from privately-held reserves.

South Korea said details on the amount and timing of the release of oil reserves would be decided after discussions with the United States and other allies.

Japanese media said Tokyo would announce its plans on Wednesday.

Benchmark Brent crude was trading above $80 a barrel on Tuesday, up from its levels before the announcement but still well below last month’s three-year high of more than $86.

The effort by Washington to team up with major Asian economies to lower energy prices sends a warning to OPEC and other big producers that they need to address concerns about high crude prices, up more than 50% so far this year.

Suhail Al-Mazrouei, energy minister of the United Arab Emirates, one of OPEC’s biggest producers, said before details of the release from U.S. reserves was announced that he saw “no logic” in lifting UAE supply for global markets.

An OPEC+ source said releasing reserves would complicate calculations for OPEC+, as it monitors the market on a monthly basis.

HEIGHTENED TENSION

“These developments point to a period of heightened political tensions between the world’s biggest consumers and OPEC+, which implies increased oil price volatility,” said Henning Gloystein at Eurasia Group.

The United States historically has worked on any coordinated stocks release with the Paris-based International Energy Agency (IEA), a bloc of 30 industrialized energy consuming nations.

Japan and South Korea are IEA members. China and India are only associate members.

Commerzbank analyst Carsten Fritsch described the U.S. release of 50 million barrels as “quite significant” and more than expected before the announcement. “The question is the time horizon of the release and how OPEC+ will react,” he added.

Under a swap from U.S. reserves, oil companies taking crude must return it – or the refined product – plus interest. Swaps are typically offered when oil firms face supply disruptions, such as a pipeline outage or damage from a hurricane.

Outright sales are less common. U.S. presidents have authorized emergency sales three times, most recently in 2011 during a war in OPEC member Libya. Sales also took place during the Gulf War in 1991 and after Hurricane Katrina in 2005.

(Reporting by Timothy Gardner in Washington; Additional reporting by Sonali Paul in Melbourne, Ghaida Ghantous in Dubai, Ahmad Ghaddar in London, OPEC team; Writing by Richard Valdmanis and Edmumd Blair; Editing by Carmel Crimmins and Alexander Smith)

U.S. home sales tumble as prices race to record high

FILE PHOTO: A real estate sign advertising a home "Under Contract" is pictured in Vienna, Virginia, outside of Washington, October 20, 2014. REUTERS/Larry Downing

By Lucia Mutikani

WASHINGTON (Reuters) – U.S home sales fell more than expected in June as a persistent shortage of properties pushed prices to a record high, suggesting the housing market was struggling to regain speed since hitting a soft patch last year.

Weak housing and manufacturing are holding back the economy, offsetting strong consumer spending. The National Association of Realtors said on Tuesday existing home sales dropped 1.7% to a seasonally adjusted annual rate of 5.27 million units last month. May’s sales pace was revised higher to 5.36 million units from the previously reported 5.34 million units.

“Meager inventory levels, especially in the entry-level segment, and still-rising prices continue to limit the selection of homes available to more budget-conscious buyers,” said Matthew Speakman, an economist at Zillow.

Economists polled by Reuters had forecast existing home sales slipping 0.2% to a rate of 5.33 million units in June. Existing home sales, which make up about 90 percent of U.S. home sales, decreased 2.2% from a year ago. That was the 16th straight year-on-year decline in home sales.

The weakness in housing comes despite cheaper mortgage rates and the lowest unemployment rate in nearly 50 years.

Supply has continued to lag, especially in the lower-price segment of the housing market because of land and labor shortages, as well as expensive building materials. The government reported last week that permits for future home construction dropped to a two-year low in June.

According to the NAR, there was a 19% drop from a year earlier in sales of houses priced $100,000 and below.

The Realtors group said there was strong demand in this market segment, but not enough homes for sale. The NAR also said last year’s revamp of the U.S. tax code, which reduced the amount of mortgage interest payments homeowners could deduct, was weighing on demand for homes priced at $1 million and above.

The 30-year fixed mortgage rate has dropped to an average of 3.81% from a more than seven-year peak of 4.94% in November, according to data from mortgage finance agency Freddie Mac. Further declines are likely as the Federal Reserve is expected to cut interest rates next week for the first time in a decade.

Last month, existing-home sales rose in the Northeast and Midwest. They tumbled in the populous South and in the West.

June’s drop in existing homes sales likely means less in brokers’ commissions, which suggests that housing probably remained a drag on the gross domestic product in the second quarter. Spending on homebuilding contracted in the first quarter, the fifth straight quarterly decline.

The Atlanta Fed is forecasting GDP rising at a 1.6% annualized rate in the second quarter. The economy grew at a 3.1% rate in the January-March period. The government will publish it snapshot of second-quarter GDP on Friday.

The PHLX housing index <.HGX> was little changed, underperforming a broadly firmer U.S. stock market. The dollar held near a five-week high against a basket of currencies. U.S. Treasury prices fell.

HOUSE PRICES RE-ACCELERATE

There were 1.93 million previously owned homes on the market in June, up from 1.91 million in May and unchanged from a year ago. The median existing house price increased 4.3% from a year ago to $285,700 in June, an all-time high. House price inflation had been slowing after a jump in mortgage rates last year dampened demand.

Last month, houses for sale typically stayed on the market for 27 days, up from 26 days in May and a year ago. Fifty-six percent of homes sold in June were on the market for less than a month.

At June’s sales pace, it would take 4.4 months to exhaust the current inventory, up from 4.3 months in May. A six-to-seven-month supply is viewed as a healthy balance between supply and demand.

First-time buyers accounted for 35% of sales last month, up from 32% in May and 31% a year ago. Economists and realtors say a 40% share of first-time buyers is needed for a robust housing market.

(Reporting by Lucia Mutikani; editing by Andrea Ricci)

U.S. senators tell drug company executives pricing is ‘morally repugnant’

By Yasmeen Abutaleb and Michael Erman

WASHINGTON/NEW YORK (Reuters) – U.S. senators called drug pricing practices “morally repugnant” and told drug company executives they do not want to hear them blame others for the high prices, taking an aggressive stance at a Senate hearing on the rising costs of prescription medicines.

Senators took aim in particular at Abbvie Inc Chief Executive Richard Gonzalez and his company’s rheumatoid arthritis drug Humira – the world’s top-selling prescription medicine.

Executives from AstraZeneca PLC, Sanofi SA, Pfizer Inc, Merck Co, Johnson & Johnson and Bristol-Myers Squibb Co also answered questions from members of the U.S. Senate Finance Committee.

The executives pointed to their companies’ records of developing lifesaving medications, saying profits generated in the lucrative U.S. market help them fund expensive research and development of future treatments.

“American research-based companies are leading the next wave of biomedical innovation to help patients whose diseases cannot be adequately treated with today’s medicines. We should work to ensure policies that support and reward these investments,” said Bristol-Myers CEO Giovanni Caforio.

The executives also voiced support for plans to reform the industry-wide system of rebates that pharmacy benefit managers (PBMs) and health insurers receive from drugmakers in exchange for preferential coverage of their medicines.

In his opening statement, Senator Ron Wyden, the Finance Committee’s top Democrat, tore into each company one-by-one for “profiteering and two-faced scheming.”

“Drugmakers behave as if patients and taxpayers are unlocked ATMs full of cash to be extracted, and their shareholders are the customers they value above all else,” Wyden said.

Senators from both parties targeted AbbVie’s Gonzalez, with Wyden noting that the CEO’s bonus was partially tied to Humira sales, which reached nearly $20 billion globally last year. Republican Senator John Cornyn criticized the company’s web of more than 130 patents that protects Humira’s exclusivity.

The drug has a list price of more than $60,000 a year, nearly double what it was in 2014, according to Rx Savings Solutions, which helps health plans and employers seek lower cost prescription medicines.

“I support drug companies recovering a profit based on their research and development and development of innovative drugs. But at some point, that patent has to end, that exclusivity has to end, to be able to get it at a much cheaper cost,” said Cornyn, the No. 2 Senate Republican from Texas.

Cornyn suggested that the powerful Senate Judiciary Committee should examine the U.S. patent system under which drug companies protect the exclusivity of their medicines.

Congress has already held several hearings on rising prescription drug prices in both the Democrat-controlled House of Representatives and the Republican-led Senate, but Tuesday’s hearing is the first time drug company executives, most of them CEOs, will face lawmakers in more than two years.

U.S. President Donald Trump has said drugmakers are “getting away with murder,” and his administration has made bringing down prescription medicine costs for U.S. consumers a top priority.

The U.S. Department of Health and Human Services (HHS) last year rolled out a plan to lower drug prices and has introduced several modest proposals to curb medicine costs, but Democrats have said the Trump administration is not doing enough.

HHS has proposed a rule to eliminate rebates for drugs paid for by Medicare and Medicaid, the government health insurance programs.

Several drugmakers temporarily froze price increases last year after criticism from Trump, but they raised prices on more than 250 prescription drugs at the start of this year, albeit at lower levels than in years past.

(Reporting by Yasmeen Abutaleb; editing by Jonathan Oatis and Bill Berkrot)