Connect with us

Investment

Weak U.S. core capital goods orders point to deepening business investment downturn – Kitco NEWS

Published

on


WASHINGTON (Reuters) – New orders for key U.S.-made capital goods fell sharply in February as demand for machinery and other products slumped, suggesting a deepening contraction in business investment that analysts said signaled the economy was already in recession.

The coronavirus pandemic has further darkened the outlook for business investment as measures to contain the highly contagious virus have brought the country to a sudden stop. The Federal Reserve has taken extraordinary steps to soften the hit on the economy. U.S. senators were set to vote on Wednesday on a record $2 trillion fiscal stimulus package.

“Business investment is the key swing factor in every recession and right now the pendulum is swinging the wrong way with declining orders likely to drag the economy over the cliff and down into recession in March,” said Chris Rupkey, chief economist at MUFG in New York.

Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.8% in February after rising by a slightly downwardly revised 1.0% in January, the Commerce Department said on Wednesday.

These so-called core capital goods orders were previously reported to have increased 1.1% in January.

Economists polled by Reuters had forecast core capital goods orders dropping 0.4% in February. There were decreases in orders for machinery, primary metals and computers and electronics products last month. But demand for electrical equipment, appliances and components increased 1.3% last month.

Shipments of core capital goods fell 0.7% last month. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement.

They increased 1.1% in January. Business investment has contracted for three straight quarters, the longest such stretch since 2009. Economists have blamed the business investment rot on the Trump Administration’s 20-month-old trade war with China. The weakness in business investment comes at a time when corporate profits are weakening.

“Given that profits are likely now declining, financial market conditions have tightened and the economy contracting, business investment will take it on the chin,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania. “Business investment in equipment will drop sharply in the second quarter.”

Stocks on Wall Street extended their massive rally from Tuesday, with investors comforted by the huge stimulus package. The dollar fell against a basket of currencies, while U.S. Treasury prices rose.

ABRUPT HALT

The coronavirus, which causes a respiratory illness called COVID-19, has brought the economy to a abrupt halt, with governors in at least 18 states, accounting for nearly half the country’s population, ordering residents to stay mostly indoors.

“Non-essential” businesses have also been ordered closed, leading to massive unemployment and a rush to apply for jobless benefits. A survey by data firm IHS Markit on Tuesday showed its gauge of U.S. business activity dropped to a record low in March. Analysts say the economy slipped into recession in March.

Recessions in the United States are called by the National Bureau of Economic Research. The NBER’s business cycle dating committee does not define a recession as two consecutive quarters of decline in real gross domestic product, as is the rule of thumb in many countries.

Instead, it looks for a drop in economic activity, spread across the economy and lasting more than a few months. Measures taken by the Fed to stem the slide include slashing interest rates to zero, promising bottomless dollar funding and implementing an array of programs to help keep companies afloat.

Overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, accelerated 1.2% last month after gaining 0.1% in January. They were boosted by a 4.6% rebound in orders for transportation equipment, which followed a 0.9% decline in January.

Orders for civilian aircraft slipped 0.3% last month after soaring 356.7% in January. Motor vehicles and parts orders accelerated 1.8% in February after falling 0.5%.

But orders for transportation equipment are set to weaken. Boeing (BA.N) has temporarily closed some its plants in Washington State, one the regions hardest hit by the coronavirus, and auto makers have shuttered factories to protect their workers from COVID-19.

Reporting by Lucia Mutikani; Editing by Andrea Ricci

Let’s block ads! (Why?)



Source link

Continue Reading

Investment

How Does Investing In Killam Apartment Real Estate Investment Trust (TSE:KMP.UN) Impact The Volatility Of Your Portfolio? – Yahoo Finance

Published

on


<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="If you're interested in Killam Apartment Real Estate Investment Trust (TSE:KMP.UN), then you might want to consider its beta (a measure of share price volatility) in order to understand how the stock could impact your portfolio. Modern finance theory considers volatility to be a measure of risk, and there are two main types of price volatility. First, we have company specific volatility, which is the price gyrations of an individual stock. Holding at least 8 stocks can reduce this kind of risk across a portfolio. The second type is the broader market volatility, which you cannot diversify away, since it arises from macroeconomic factors which directly affects all the stocks on the market.” data-reactid=”28″>If you’re interested in Killam Apartment Real Estate Investment Trust (TSE:KMP.UN), then you might want to consider its beta (a measure of share price volatility) in order to understand how the stock could impact your portfolio. Modern finance theory considers volatility to be a measure of risk, and there are two main types of price volatility. First, we have company specific volatility, which is the price gyrations of an individual stock. Holding at least 8 stocks can reduce this kind of risk across a portfolio. The second type is the broader market volatility, which you cannot diversify away, since it arises from macroeconomic factors which directly affects all the stocks on the market.

Some stocks mimic the volatility of the market quite closely, while others demonstrate muted, exagerrated or uncorrelated price movements. Beta can be a useful tool to understand how much a stock is influenced by market risk (volatility). However, Warren Buffett said ‘volatility is far from synonymous with risk’ in his 2014 letter to investors. So, while useful, beta is not the only metric to consider. To use beta as an investor, you must first understand that the overall market has a beta of one. A stock with a beta greater than one is more sensitive to broader market movements than a stock with a beta of less than one.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content=" View our latest analysis for Killam Apartment Real Estate Investment Trust ” data-reactid=”30″> View our latest analysis for Killam Apartment Real Estate Investment Trust

What we can learn from KMP.UN’s beta value

Given that it has a beta of 0.87, we can surmise that the Killam Apartment Real Estate Investment Trust share price has not been strongly impacted by broader market volatility (over the last 5 years). This means that — if history is a guide — buying the stock would reduce the impact of overall market volatility in many portfolios (depending on the beta of the portfolio, of course). Many would argue that beta is useful in position sizing, but fundamental metrics such as revenue and earnings are more important overall. You can see Killam Apartment Real Estate Investment Trust’s revenue and earnings in the image below.

TSX:KMP.UN Income Statement April 10th 2020TSX:KMP.UN Income Statement April 10th 2020

How does KMP.UN’s size impact its beta?

Killam Apartment Real Estate Investment Trust is a small company, but not tiny and little known. It has a market capitalisation of CA$1.8b, which means it would be on the radar of intstitutional investors. Small companies often have a high beta value, but they can be heavily influenced by company-specific events. This might explain why this stock has a low beta.

What this means for you:

One potential advantage of owning low beta stocks like Killam Apartment Real Estate Investment Trust is that your overall portfolio won’t be too sensitive to overall market movements. However, this can be a blessing or a curse, depending on what’s happening in the broader market. In order to fully understand whether KMP.UN is a good investment for you, we also need to consider important company-specific fundamentals such as Killam Apartment Real Estate Investment Trust’s financial health and performance track record. I urge you to continue your research by taking a look at the following:

  1. Financial Health: Are KMP.UN’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  2. Past Track Record: Has KMP.UN been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of KMP.UN’s historicals for more clarity.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.” data-reactid=”53″>If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

Let’s block ads! (Why?)



Source link

Continue Reading

Investment

Vietnam to disburse $30 billion of public investment funds this year to tackle virus impact – TheChronicleHerald.ca

Published

on


HANOI (Reuters) – Vietnam will aim to disburse $30 billion in public investment funds this year, up 67% year-on-year, the government said on Friday, as it seeks to boost an economy hit hard by the coronavirus outbreak that has infected 255 people nationally.

Public investment, excluding investment made by state-owned enterprises, often accounts for around one-fifth of Vietnam’s total investment and is spent on infrastructure and social development projects.

The Southeast Asian country’s gross domestic product in the first quarter of this year grew at its slowest pace in 10 years, at 3.8% due to the pandemic.

(Reporting by Khanh Vu; Editing by Muralikumar Anantharaman)

Let’s block ads! (Why?)



Source link

Continue Reading

Investment

Vietnam to disburse $30 billion of public investment funds this year to tackle virus impact – The Guardian

Published

on


HANOI (Reuters) – Vietnam will aim to disburse $30 billion in public investment funds this year, up 67% year-on-year, the government said on Friday, as it seeks to boost an economy hit hard by the coronavirus outbreak that has infected 255 people nationally.

Public investment, excluding investment made by state-owned enterprises, often accounts for around one-fifth of Vietnam’s total investment and is spent on infrastructure and social development projects.

The Southeast Asian country’s gross domestic product in the first quarter of this year grew at its slowest pace in 10 years, at 3.8% due to the pandemic.

(Reporting by Khanh Vu; Editing by Muralikumar Anantharaman)

Let’s block ads! (Why?)



Source link

Continue Reading

Trending