Financial and Economic Brief - Apr. 18, 2017by © Liberty Publishing, Inc.
U.S. Producer Prices Fall
According to the Labor Department, U.S. producer prices fell in March 0.1% for the first time since August. The producer price index was weighed down by a drop in the cost of services and energy products. With oil prices rising on news that Saudi Arabia wants to extend production cuts for another six months, monthly producer prices are likely to continue their upward trend. Overall domestic price pressures are growing, with most consumer inflation measures now above the Federal Reserve's 2% target. The increases reflect, in part, “an ebb in the dollar's rally and strengthening domestic demand.”
U.S. Dollar Drops
The U.S. dollar dropped 0.7%, after President Trump told the Wall Street Journal that the dollar is “getting too strong.” The dollar hit its highest level in 13 years in the months after President Trump won the election. The increase was viewed as a sign that investors believe America will grow faster than other parts of the world. But now the president is worried that U.S. businesses, especially manufacturers, won't be able to compete. American goods are more expensive when compared to foreign products when the dollar is high. “It's very, very hard to compete when you have a strong dollar and other countries are devaluing their currency,” Trump said.
Wells Fargo Flat Q1
Wells Fargo (WFC) reported flat first-quarter profits amid larger costs and lower mortgage banking income as the bank continued to move beyond its issues over unauthorized customer accounts. The news sent the bank’s shares lower nearly 2.3% to $51.90. In September the bank was hit with $185 million in penalties for opening as many as 2.1 million accounts that may not have been authorized. Although expenses rose during Q1, Wells Fargo plans $2 billion in annual cost cuts going forward, including centralizing marketing, risk, communications and other operations, along with analyzing branch operations. Savings will be reinvested in growing the bank.