Rising oil prices have heightened fears of global inflation as the commodity is on track to hit the $100 price milestone.
This is coming as American households gear up for student loan payments. Also, the inevitable increase in childcare costs as 70,000 childcare providers are facing an imminent shutdown. Finally, Apple’s troubles seem to linger as its iPhone 15 fails to generate buzz among Chinese consumers.
Here’s a rundown of some of the major financial news that caught our radar this week.
Rising oil prices reignite inflation worries.
For the first time this year, the price of a barrel of crude oil surpassed $90. This sparks concerns that inflation could rise further in the global economy. Higher oil prices are a burden on the global economy, as they raise transportation and production costs and reduce consumer spending.
Brent crude, the benchmark oil price, reached a 10-month high of nearly $94 per barrel last week. This is up from its lowest point of $72 per barrel in June – bound for its largest quarterly increase since Russia’s invasion of Ukraine.
OPEC and Russia’s production limits, coupled with China’s rising demand have fueled oil demand.
Strikes result in 4.1 million days of missed jobs.
The Labor Department reports that 4.1 million workdays were lost in August 2023 as a result of labor strikes around the country. Since August 2000, that early estimate is the largest monthly total.
The actors in Hollywood who joined the writers’ strike in July have contributed to the present upsurge. There are about 160,000 members of the Screen Actors Guild-American Federation of Television and Radio Artists. About 11,500 are members of the Writers Guild of America.
Other sectors have seen an increase in labor activism. Stoppages have resulted from certain standoffs. But unions have also been able to settle some of them by obtaining greater benefits and higher compensation from companies that have found it difficult to fill positions in the competitive labor market.
Resumption of student loan payments could cost US households $100 billion.
The resumption of student loan payments could divert up to $100 billion from American households over the course of the next year in order to service the loans. Tens of millions of student-loan borrowers will be required to make monthly payments averaging between $200 and $300, beginning on October 1.
This will be the first time that debtors have been required to repay their loans since the Education Department instituted a pause in March 2020.
The restart of student loan payments will add an extra layer of financial burden to the already new rising scale of credit card expenses.
FTX to sell customers crypto worth $3 billion.
Defunct crypto exchange, FTX, has received consent from a US court to sell more than $3 billion worth of cryptocurrency that has been frozen since the exchange’s closure. This is a move that will help repay its customers and reduce its exposure to sudden price fluctuations in cryptocurrencies.
At a court hearing in Wilmington, Delaware, U.S. Bankruptcy Judge John Dorsey approved FTX’s proposal. This will allow it to sell up to $100 million in cryptocurrency per week and enter into hedging and staking agreements.
In turn, these will allow FTX to minimize the risk of price volatility and earn passive income on more mainstream crypto assets such as Bitcoin and Ether.
While FTX has stated that its nearly 10 million customers are unlikely to recover the entirety of the cryptocurrency they deposited, the company has been seeking bankruptcy court consent to liquidate assets that would partially reimburse them.
FTX also stated that it intends to sell its suspended tokens for dollars in order to reduce its exposure to crypto price fluctuations.
Rebounding dollar eats into revenues of US companies.
The dollar’s rebound to an eight-month high is hurting sales and lowering profit margins for American companies, as goods become more expensive for customers abroad.
American companies that derive more than half of their revenue from outside the U.S. are projected to experience an 18% decline in second-quarter earnings, according to FactSet data through August 30, covering 98.2% of S&P companies.
In contrast, companies with more than half of their sales in the U.S. are projected to report earnings growth of 4%.
The dollar increased last year due to the Federal Reserve’s campaign to combat inflation with interest rate hikes. In recent weeks, rising investor confidence in a soft landing for the U.S. economy has provided another stimulus.
In addition, weak economic data in Europe and Asia contributed to the dollar’s ascent.
More than 70,000 childcare providers could shut down.
As of the end of this month, it is probable that more than 70,000 childcare facilities that benefited from US Government stabilization funds will close.
As part of the American Rescue Plan Act of 2021, the federal government provided states with nearly $24 billion in stabilization funds to keep childcare services viable.
With the percentage of working mothers with young children at an all-time high, this would leave roughly 3.2 million children without access to childcare services.
This would make it difficult for parents to juggle working and caring for their children. Also, it could result in a loss of $10.6 billion in revenue due to lost worker productivity as parents reduce their hours or quit their employment in an effort to find new care.
ARM stock jumps 25% on opening day.
After its shares in its initial public offering opened at $51 apiece, Arm Holdings, the chip design company under SoftBank’s control, increased nearly 25% on its first day of trading.
At the start of trading, Arm was valued at nearly $60 billion. The company, which trades under the symbol “ARM,” sold approximately 95,500,000 shares. SoftBank, which took the company private in 2016, holds about 90 percent of the outstanding shares.
iPhone 15 fails to create buzz in China.
Apple’s annual release of its new iPhone lineup failed to generate the usual excitement among Chinese consumers, the latest indication of the company’s escalating difficulties in one of its largest markets.
True, many diehard fans remained up late to watch Apple’s Cupertino, California, headquarters unveil the iPhone 15 models.
But unlike in previous years, and despite options for…
- titanium cases
- more powerful processors
- camera upgrades
- an unexpected price freeze on most models
…Apple’s new smartphones didn’t feature in the top trending topics for discussion among Weibo’s half-billion users the day of release.