Tag: news

Economy

The relationship between the party affiliations of the U.S. presidents and economic growth has been a topic of extensive research and debate. Historically, some studies have suggested a correlation between the party in power and economic performance. For instance, data from the post-World War II era often shows that the U.S. economy has grown faster under Democratic presidents than Republican presidents. However, this correlation does not necessarily imply causation.

Kar Yong Ang, the Octa analyst, said: ‘Economic growth is a function of numerous variables, including global economic conditions, technological advancements, fiscal and monetary policies, and unforeseen events like natural disasters or pandemics. Therefore, attributing economic performance solely to the president’s party affiliation can be overly simplistic and potentially misleading.’

Indeed, the legislative branch also plays a crucial role in shaping economic policy. A president’s ability to implement their economic agenda often depends on the composition of Congress. For example, a president facing a divided government may struggle to pass significant economic reforms, regardless of party affiliation.

Still, there is widespread belief that Democratic administrations tend to focus more on fiscal stimulus and social welfare programs, which can boost consumer spending and economic growth in the short term. On the other hand, Republican administrations often emphasize tax cuts and deregulation, which can stimulate business investment and long-term economic growth.

The U.S. Key macro indicators under four presidents (2004–2024)

Source: Octa

At the same time, both bad and good events happen, regardless of who is in the White House. ‘Quite frankly, sometimes it’s just pure luck that defines Presidents’ track record on the economy. For example, Obama entered the White House when the U.S. economy was just about to start recovering following the great financial crisis of 2007–2008, whereas Trump may be said to be less fortunate as he faced the unprecedented Covid crisis during the final year of his presidency’, says Kar Yong Ang, Octa’s analyst. Overall, judging by historical macro indicators, there is no definite conclusion to make about which President is better for the economy.

U.S. Stocks

The U.S. stocks tend to experience increased volatility in the months leading up to an election. This is largely due to the uncertainty surrounding potential policy changes that could affect international trade, economic growth, and geopolitical stability. Therefore, market participants often engage in ‘wait-and-see’ behaviour, holding off on major investment decisions until the election outcome is clear. Historically, the stock market tends to perform better in the year following an election, particularly if the incumbent party wins, as this suggests policy continuity.

While elections can certainly stir immediate reactions, historical data reveals that their long-term impact on financial markets tends to be limited. Market performance over the medium to long term is more often influenced by broader economic parameters like inflation trends rather than who wins the election.

Dow Jones Industrial Average (DJIA) performance under four presidents (2004–2024)

Source: Octa

Historically, sectors like healthcare, energy, technology, and finance react differently to election results due to their sensitivity to legislative changes. The 2016 U.S. election serves as a notable example of markets reacting strongly to the election results, anticipating tax cuts and regulatory reforms that boosted market sentiment.

U.S. Dollar

Both domestic and international perceptions of the candidates’ economic policies influence the U.S. dollar’s performance during the election years. A candidate perceived as fiscally conservative might strengthen the dollar due to expectations of reduced government spending and lower inflation. Conversely, a candidate favouring expansive fiscal policies could lead to a weaker dollar due to concerns over increased debt.

Trade policies are another crucial factor. A candidate with a protectionist stance might introduce tariffs or renegotiate trade deals, which can affect the dollar’s value. Protectionist policies can lead to a stronger dollar in the short term due to reduced imports, but they might also result in retaliatory measures from trade partners, which could weaken the dollar in the long run.

Geopolitical stability and foreign relations are additional aspects that can affect the dollar during the election periods. A candidate perceived as more stable and predictable in foreign policy might boost the investors’ confidence, leading to a stronger dollar. On the other hand, a candidate whose policies are seen as potentially destabilizing could lead to a weaker dollar as investors seek alternative assets.

The U.S Dollar Index (DXY) performance under four presidents (2004–2024)

Source: Octa

Over the past 20 years, the U.S. Dollar Index (DXY) has performed better under Democratic Presidents and had negative returns under Republican leadership. However, as with the U.S. stock indices, it’s crucial not to oversimplify this trend. The U.S. dollar is a global reserve currency influenced by a myriad of factors beyond just presidential policies.

Gold

Gold, considered a safe-haven asset, typically sees increased demand during election periods marked by uncertainty. Historical data indicates that on a micro level, gold prices tend to rise in the months leading up to an election and may continue to do so if the election results are contested or lead to significant policy shifts.

However, Kar Yong Ang, an Octa analyst, notes: ‘If we look at the bigger picture, we see that gold price just generally tends to increase in the long-term and the ideological stance of an incumbent U.S. President has very little or no impact on its performance’. Indeed, the value of gold almost doubled during President Obama’s first term in office but experienced a 30% decline during his second term.

The U.S Dollar Index (DXY) performance under four residents (2004–2024)

Source: Octa

According to a study by the World Gold Council (WGC), gold typically performs slightly better in the six months leading up to a Republican president’s election and stays flat afterwards. On the other hand, it tends to underperform before a Democratic president’s election and performs just below its long-term average in the six months post-election period.^[1] However, WGC admits that these results are statistically insignificant and that gold is responding not to the party affiliation of an elected President but, more likely, to the expected effect of specific policies.

About Octa

Octa is an international broker that has been providing online trading services worldwide since 2011.

1. https://www.gold.org/goldhub/research/ballots-bullion-examining-us-elections-effect-gold ↑

This article was originally posted on FX Empire

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In a landscape where economic policy and market performance often intersect, a CNBC survey found that investors prefer former President Donald Trump’s potential impact on the stock market.

The poll, which surveyed 400 investors, traders, and money managers, found that 67% believe Trump would benefit stocks more.

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CNBC said the sentiment appears to be rooted in historical performance. During Trump’s four-year tenure, the S&P 500 surged 68%, while the Nasdaq saw a 137% climb. In contrast, under Biden’s administration thus far, the same indexes have gained 44% and 34%, respectively.

However, the investment community is divided on the market’s near-term trajectory. The survey found an even split among respondents; a third anticipate a drop, another third expect gains, while the remaining third see a rangebound market.

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That uncertainty reflects the factors influencing today’s economic landscape. While presidential policies can sway market sentiment, other elements often play a more important role. As Kristina Hooper, chief global market strategist at Invesco, told the New York Times, “Markets are politically agnostic. With good reason: it doesn’t matter.”

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The recent market rally has been largely attributed to investor enthusiasm surrounding artificial intelligence (AI) rather than political developments. CNBC noted that Microsoft emerged as the front-runner in the AI race, with 50% of survey respondents viewing it as best positioned to capitalize on the tech. Surprisingly, Nvidia did not make the top of that list.

The Federal Reserve’s monetary policy decisions continue to be a factor. Two-thirds of those polled expect the Fed to cut interest rates before year’s end (with many seeing a rate cut as soon as September), a move that could impact the market.

Interestingly, despite the clear preference for Trump regarding market performance, investors showed concerns about the current state of the major indexes. Eighty percent of respondents admitted feeling uneasy about the heavy concentration of tech stocks in the benchmarks.

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Looking beyond equities, the survey highlighted India as the most attractive overseas market, followed by Japan and Europe. Corporate bonds emerged as the preferred investment vehicle in the absence of stocks.

As the 2024 election approaches, investors are reminded that while presidential rhetoric often ties market performance to administration policies, the reality is far more nuanced. Historical data shows that markets have generally trended upward regardless of which party occupies the White House.

Ultimately, as the survey results indicate, while investor sentiment may lean toward Trump for potential market gains, the road ahead for stocks appears as unpredictable as ever.

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The U.S. has a sweet tooth. Americans consume 34 teaspoons of sugar each day, according to the U.S. Department of Agriculture. That adds up to more than 100 pounds every year.

That much sugar consumption isn’t healthy. However, this sugar addiction is great for the bottom lines of companies focused on making sugary drinks, desserts, and snacks. They generate billions of dollars in profits each year. Many pay a large portion of their earnings to investors via dividend income.

Because of that, sugar stocks can be a great way to generate passive income. Coca-Cola (NYSE: KO), Hershey (NYSE: HSY), and Mondelez (NASDAQ: MDLZ) offer sweet dividends that can help satisfy any investor’s desire for passive income.

Add some pop to your passive income

Coca-Cola has an elite record of paying dividends. The beverage giant delivered its 62nd consecutive annual dividend increase in early 2024, raising its payout by 5.4% compared to the prior year’s level. That kept Coca-Cola in the elite group of Dividend Kings, companies with 50 or more years of consecutive dividend increases.

Coca-Cola paid $8 billion in dividends to its investors last year alone, boosting its total to $84.7 billion since January 2010. The beverage behemoth currently offers a dividend yield of around 2.7%. That’s more than double the S&P 500‘s dividend yield (recently around 1.3%).

The company is in a strong position to continue growing its dividend. Coca-Cola generates robust free cash flow ($9.2 billion expected in 2024 after covering capital expenditures) and has a cash-rich balance sheet ($17.4 billion of cash, equivalents, and short-term investments).

Meanwhile, the company expects its earnings to continue rising, driven by consumers’ sugar addiction and investments to grow its business. Its long-term target is to organically grow its revenue by 4% to 6% annually and deliver 7% to 9% earnings-per-share growth each year. That growing income stream should enable Coca-Cola to continue increasing its satisfying dividend.

A sweet income stream

Hershey has a long history of paying dividends. The chocolatier has increased its payout for 15 straight years, including giving investors a 15% raise earlier this year. Hershey currently offers a tasty dividend yield of 2.8%.

The iconic chocolate company owns top brands like its namesake, Reese’s, and KitKat. These brands generate billions of dollars in annual revenue and cash flow for the company. It has rung up more than $5 billion in sales during the first half of this year and nearly $1 billion in income.

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Hershey has been investing heavily in growing its business, including adding more salty snacks to its growing mix of sweets. These investments are helping grow the company’s earnings and cash flow. Its long-term target is to grow net sales by 2% to 4% per year and deliver 6% to 8% adjusted earnings-per-share growth. Meanwhile, Hershey hopes to increase its dividend in line with its earnings over the long term.

This dividend hits the spot

Mondelez has delivered dividend increases for the past dozen years. The global snacking giant gave its investors an 11% raise in June and delivered double-digit dividend-per-share growth in each of the last five years. It now yields around 2.6%.

The company has a knack for satisfying consumers’ desire for a snack. About 88% of consumers have a snack each day, with most of them (76%) loyal to specific brands. Mondelez owns many beloved brands, including Oreo, Milka, Cadbury, Ritz, Chips Ahoy!, and Clif. It’s the world’s leading cookie/biscuit seller and the second-largest chocolate company.

Mondelez aims to grow its revenue by 3% to 5% per year, putting it on track to deliver high single-digit earnings-per-share growth and strong free cash flow ($3+ billion annually). The company plans to use its free cash flow to make acquisitions, repurchase shares, and continue paying a growing dividend.

These sweet payouts should continue rising

For better or worse, sugar is a big part of the American diet. That’s enabling companies that produce sugary drinks, snacks, and treats to earn huge profits each year. They’re returning some of that money to investors via dividends. That makes them great options for investors seeking to satisfy their craving for more passive income.

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Today’s certificate of deposit (CD) interest rates are some of the highest we’ve seen in more than a decade thanks to several rate hikes by the Federal Reserve. Still, CD rates vary widely across financial institutions, so it’s important to ensure you’re getting the best rate possible when shopping around for a CD. The following is a breakdown of CD rates today and where to find the best offers.

Overview of CD rates today

Historically, longer-term CDs offered higher interest rates than shorter-term CDs. Generally, this is because banks would pay better rates to encourage savers to keep their money on deposit longer. However, in today’s economic climate, the opposite is true.

See our picks for the best CD accounts available today>>

As of September 1, 2024, CD rates remain competitive across the board. However, the highest CD rates can be found for shorter terms of around one year or less; the best rates stand at about 4% to 5% APY. The best CD rate today comes from Marcus by Goldman Sachs on its 1-year CD. Account holders can earn 4.70% APY with a minimum deposit of $500.

It’s certainly possible to find CDs with longer terms of two years or more that offer competitive rates, though they are closer to about 4% to 4.5% APY.

Here is a look at some of the best CD rates available today from our verified partners:

How much interest can I earn with a CD?

The amount of interest you can earn from a CD depends on the annual percentage rate (APY). This is a measure of your total earnings after one year when considering the base interest rate and how often interest compounds (CD interest typically compounds daily or monthly).

Say you invest $1,000 in a one-year CD at 1.85% APY (the current national average CD rate for a one-year term). At the end of that year, your balance would grow to $1,018.50 — your initial $1,000 deposit, plus $18.50 in interest.

Now let’s say you choose a one-year CD that offers 5% APY instead. In this case, your balance would grow to $1,051.16 over the same period, which includes $51.16 in interest.

The more you deposit in a CD, the more you stand to earn. If we took our same example of a one-year CD at 5% APY, but deposit $10,000, your total balance when the CD matures would be $10,511.62, meaning you’d earn $511.62 in interest. ​​

Read more: What is a good CD rate?

Types of CDs

When choosing a CD, the interest rate is usually top of mind. However, the rate isn’t the only factor you should consider. There are several types of CDs that offer different benefits, though you may need to accept a slightly lower interest rate in exchange for more flexibility. Here’s a look at some of the common types of CDs you can consider beyond traditional CDs:

• Bump-up CD: This type of CD allows you to request a higher interest rate if your bank’s rates go up during the account’s term. However, you’re usually allowed to “bump up” your rate just once.

• No-penalty CD: Also known as a liquid CD, type of CD gives you the option to withdraw your funds before maturity without paying a penalty.

• Jumbo CD: These CDs require a higher minimum deposit (usually $100,000 or more), and often offer higher interest rate in return. In today’s CD rate environment, however, the difference between traditional and jumbo CD rates may not be much.

• Brokered CD: As the name suggests, these CDs are purchased through a brokerage rather than directly from a bank. Brokered CDs can sometimes offer higher rates or more flexible terms, but they also carry more risk and might not be FDIC-insured.

(Reuters) — Intel (INTC) CEO Pat Gelsinger and key executives are expected to present a plan later this month to the company’s board of directors to slice off unnecessary businesses and revamp capital spending, according to a source familiar with the matter, as they try to revive the once-dominant chipmaker’s fortunes.

The plan will include ideas on how to shave overall costs by selling businesses, including its programmable chip unit Altera, that Intel can no longer afford to fund from the company’s once-sizeable profit.

Gelsinger and other high-ranking executives at Intel are expected to present the plan at a mid-September board meeting, the same source said.

Details of Gelsinger’s proposal is reported here for the first time.

Intel declined to comment.

The proposal does not yet include plans to split Intel and sell off its contract manufacturing operation, or foundry, to a buyer such as Taiwan Semiconductor Manufacturing Co. (TSM, 2330.TW), according to the source and another person familiar with the matter.

The presentation, including the plans around its manufacturing operations, are not yet finalized and could change ahead of the meeting.

Intel has already broken off its foundry business from its design business, and has been reporting its financial results separately since the first calendar quarter of this year.

The company has erected a wall between the design and manufacturing businesses to assure that potential customers of the design division would have no access to technology secrets of customers using Intel’s factories, known as fabs, to manufacture their chips.

Intel is suffering through one of its worst periods as it attempts to play catchup in the AI era against the likes of Nvidia (NVDA), the dominant AI chipmaker with a $3 trillion market capitalization. In contrast, Intel’s has now sunk to below $100 billion after a disastrous second-quarter earnings report in August.

The proposal Gelsinger and others will present is likely to include plans to further reduce the company’s capital spending on factory expansion. The pitch may include plans to pause or altogether halt its $32 billion factory in Germany, a project that has reportedly been delayed, the source said.

In August, Intel said it expects to cut capital spending to $21.5 billion in 2025, down 17% from this year, and issued a weaker-than-expected third-quarter forecast.

In addition to the CEO and executive plans, Intel has retained Morgan Stanley and Goldman Sachs to advise the board on what businesses Intel can sell and what it needs to retain, according to two sources with knowledge of the company’s advisory plans.

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Intel has not yet asked for bids on the product units, but will likely do so once the board endorses a plan, according to the two sources familiar with the company’s advisory plans.

Altera spin-out

The mid-September board meeting is pivotal for the one-time chipmaking king. Intel reported a disastrous second quarter in August, which included pausing the company’s dividend payments and a 15% staff cut, aimed at saving $10 billion.

Weeks later, chip industry veteran Lip-Bu Tan resigned from the board after months of debate over the company’s future, Reuters reported, creating a vacuum of deep semiconductor business experience on the board.

Last Thursday, after the Reuters report, Gelsinger sought to reassure investors about the company’s weak financial performance.

“It’s been a difficult few weeks,” Gelsinger said at a Deutsche Bank conference. “And we’ve been working hard to address the issues.”

Gelsinger said the company is “taking seriously” what investors have said and that Intel is focused on phase two of the company’s turnaround plan.

Part of those plans will remain unresolved until the mid-September meeting. Then, the company’s directors will likely make crucial decisions about which businesses Intel will keep and which it will shed.

One potential unit the company may look to unload is its programmable chip business, Altera, which Intel acquired for $16.7 billion in 2015. Intel has already taken steps to spin it out as a separate but still wholly owned subsidiary and has said it planned to sell a portion of its stake in an initial public offering in the future, though it has not set a date.

But Altera could also be sold entirely to another chipmaker interested in growing its portfolio, and the company has quietly begun exploring whether a sale would be possible, according to one source familiar with its advisory plans and one of the sources familiar with the plans to cut businesses.

Infrastructure chipmaker Marvell is one potential buyer for such a transaction, according to one of the sources.

Bloomberg earlier reported various options for Intel including a potential split of Intel’s product design and manufacturing businesses that is expected to be discussed at the board meeting.

(Reporting by Max A. Cherney in San Francisco and Milana Vinn in New York; Editing by Kenneth Li, Anirban Sen, Paritosh Bansal, Deepa Babington and Mark Porter)