The Chicago Fed National Activity Index, a gauge of overall economic activity and inflationary pressure, rose 0.27 points to 0.39 in August.
The PMI Services Flash for August fell -1.5 points to 58.5.
New home sales rose for July rose less than expected, coming in at an annualized rate of 412,000.
The Dallas Fed general business activity index fell from 12.7 in July to 7.1 in August.
I’m not sure how else you interpret this “inversion” nonsense.
Burger King Worldwide Inc. is in talks to buy Canadian coffee-and-doughnut chain Tim Hortons Inc., a deal that would be structured as a so-called tax inversion and move the hamburger seller’s base to Canada.
The two sides are working on a deal that would create a new company, they said in a statement, confirming a report on the talks by The Wall Street Journal. The takeover would create the third-largest quick-service restaurant provider in the world, they said.
The point of this sort of a merger, beside the business aspect, is to move the headquarters of Burger King to a lower tax nation:
Inversion deals have been on the rise lately, and are facing stiff opposition in Washington given that they threaten to deplete U.S. government coffers. A move by Burger King to seal one is sure to intensify criticism of them, since it is such a well-known and distinctly American brand.
By moving to a lower-tax jurisdiction, inversion deals enable companies to save money on foreign earnings and cash stowed abroad, and in some cases lower their overall corporate rate. Even though many of the headline-grabbing inversion deals of late have involved European companies, Canada has also been the focal point for a number of them, given its proximity and similarity to the U.S. Canada’s federal corporate tax rate was lowered to 15% in 2012.
And surprise – Canada’s economy is picking up steam and corporations are eyeing it as a place to locate. Imagine that.
Canada’s corporate tax rate in Ontario of 26.5% (the federal rate of 15% plus Ontario’s provincial corporate tax rate of 11.5%) is considerably favorable to the American corporate tax rate of 35% thanks in large part to the conservative Canadian government led by Stephen Harper. The Harper government lowered the federal tax rate to 15% in 2012 down originally from 28% since it took office in 2006.
In fact, a recent KPMG Report, Focus on Tax, ranked Canada as the #1 country with the most business-friendly tax structure among developed countries when adding up a wide range of tax costs to businesses from statutory labor costs to harmonized sales tax. When comparing developed countries to what companies pay in the U.S.; Canada came in at 53.6%, the U.K. came in at 66.6%, and the Netherlands at 74.5% of the U.S. corporate tax burden.
Meanwhile, our politicians are trying to find a way to prevent that, because, well because they apparently think corporations work for them and exist to pay whatever tax rate they deem necessary. Of course, in a free country, this wouldn’t even be an issue. Corporations, like people, have the right to move wherever they wish. It is their call, not the government’s.
But, here that’s not the case:
Burger King’s possible merger to obtain the favorable Canadian corporate tax rate is a true reflection of the American corporate tax rate being the highest in the OECD. However, rather than taking the same stance on outright cutting the corporate tax rate as the Harper government did to keep the U.S. a competitive place to do business, President Obama calls tax inverting companies like Burger King “corporate deserters who renounce their citizenship to shield profits”. At the urging of President Obama, Congress is considering a bill to make it harder for companies to change addresses abroad. Treasury Secretary Jacob Lew called for a “new sense of economic patriotism,” asking Congress to pass curbs to inversions. The Treasury Department currently is also preparing options to deter or prevent corporate tax inversions potentially on its own.
“Corporate deserters”. “Economic patriotism”. It’s Orwellian Newspeak at its finest. Imagine anyone trying to “shield profits” from a grasping and out-of-control government. It is also another, in a long line of indicators, that this is no longer a free country in the sense we used to believe it was. It is now a country where every other entity is subservient to the needs or wants of intrusive, controlling government.
The PMI Manufacturing Index Flash for August rose 1.7 points to 58.0.
The Philadelphia Fed Survey for August rose a sharp 4.1 points to 28.0, a rise not supported by the report’s underlying indices. Both new orders and shipments slowed by half, while unfilled orders are shrinking and delivery times are improving. All of these are symptomatic of slowing activity. The headline number is not a a composite of components but is based on a single subjective question in the survey. This month, at least, the answer to that question seems at variance with the other indices in the report.
Existing home sales rose 2.4% to an annualized rate of 5.15 million units in July.
Initial jobless claims fell 14,000 last week, to 298,000. The 4-week moving average rose 5,000 to 300,750. Continuing claims fell 49,000 to 2.500 million.
The Bloomberg Consumer Comfort Index fell -0.2 points to 36.6 in the latest week.
The Fed’s balance sheet fell $-19.0 billion last week, with total assets of $4.412 trillion. Reserve Bank credit fell $-3.7 billion.
The Fed reports that M2 Money Supply fell by $-8.7 billion last week.
The Consumer Price Index rose 0.1% in July, at both the headline and core level. On a year-over-year basis, the CPI is up 2.0% at the headline level, and up 1.9% less food and energy.
July housing starts jumped 15.7%, to a 1.093 million annual rate.
ICSC-Goldman reports weekly retail sales fell -1.3%, but were up a strong 3.8%% on a year-over-year basis. Redbook, meanwhile, reports a slowing to 3.7% in retail sales over last year, compared to 4.8% last week.
The Producer Price Index for total final demand slowed to 0.1% in July. Prices excluding food & energy rose 0.2%. Prices excluding food, energy, and trade services increased 0.2%. Prices for goods were unchanged, while services rose 0.1%. On a seasonally adjusted year-ago basis, PPI final demand was up 1.7 %. Excluding food & energy, PPI final demand was up 1.6%.
The New York Fed’s Empire State Manufacturing Survey fell to 14.69 in August vs. 25.60 in July.
Net foreign demand for long-term U.S. securities fell to $-30.2 billion in June. Foreign accounts were heavy sellers of Treasuries and corporate bonds.
Industrial production in July rose 0.4%, while capacity utilization in the nation’s factories rose 0.1% to 79.2%.
The Reuters/University of Michigan’s consumer sentiment index in August fell -2.6 points to 79.2.
E-commerce sales rose a very sharp 4.9% in the second quarter of 2014, compared to 3.3% in the first quarter.
I missed yesterday’s stats, since I was building the new site. So, let’s catch up.
The MBA reports that mortgage applications fell -2.7% last week. Purchases were down -1.0% and re-fis fell -4.0%.
July retail sales were unchanged in July. retail sales less autos, and retail sales less autos and gas both rose 0.1%.
The Atlanta Fed’s Business Inflation Expectations survey for July reports businesses expect unit costs to rise 2.0% in the next 12 months.
June business inventories rose 0.4%, but a weaker 0.3% sales increase left the stock-to-sales ratio unchanged at 1.29.
Weekly initial jobless claims rose 21,000 to 311,000. The 4-week average rose 2,250 to 295,750. Continuing claims rose 25,000 to 2.544 million.
Import prices fell -0.2% in July, while export prices were unchanged. On a year-over-year basis, import prices rose 1.0% while export prices rose 0.4%.
The Bloomberg Consumer Comfort Index rose for the first time in three weeks, up 0.6 points to 36.8 in the latest week.
The Fed’s balance sheet rose $21.8 billion last week, with total assets of $4.432 trillion. Total reserve bank credit rose by $11.5 billion.
The Fed reports that M2 money supply shrank by $-34.4 billion in the latest week.
The NFIB small business optimism index rose 0.7 points in July to 95.7.
The government’s budget deficit, as of the end of July, is running 24% below last year, at $460.5 billion vs. $607.4 billion.
ICSC-Goldman reports weekly retail sales down -1.4%, and were up only 3.2% on a year-over-year basis. Conversely, Redbook reports a strong 4.8% increase in retail sales over last year.