Venezuela economic crisis means fewer meals, more starch

Struggling Venezuelan family

By Carlos Garcia Rawlins and Alexandra Valencia

CARACAS (Reuters) – Venezuela’s soaring prices and chronic shortages have left 65-year-old homemaker Alida Gonzalez struggling to put meals on the table.

She and her four family members in the Caracas slum of Petare now routinely skip one meal per day and increasingly rely on starches to make up for proteins that are too expensive or simply unavailable.

“With the money we used to spend on breakfast, lunch and dinner, we can now buy only breakfast, and not a very good one,” said Gonzalez in her home, which on a recent day contained just half a kilo of chicken (about a pound), four plantains, some cooking oil, a small packet of rice, and a mango.

The family did not know when they would be able to buy more.

Recession and a dysfunctional state-run economy are forcing many in the South American OPEC country of 30 million to reduce consumption and eat less-balanced meals.

In a recent survey by researchers from three major universities often critical of the government, 87 percent of the respondents said their income was insufficient to purchase food.

The study of nearly 1,500 families found rising percentages of carbohydrates in diets, and found that 12 percent of those interviewed do not eat three meals a day.

Government supporters have long pointed proudly to the improvement in eating under late socialist leader Hugo Chavez, who used oil income to subsidize food for the poor during his 14-year rule and won United Nations plaudits for it.

But President Nicolas Maduro, Chavez’s successor, has faced a collapse in the price of oil, which provides almost all foreign income. He further has blamed an opposition-led “economic war,” though critics deride that as an excuse.

Either way, Venezuelans are tired and cross.

A minimum wage is now only around 20 percent of the cost of feeding a family of five, according to one monitoring group. Lines snake around state supermarkets from before dawn.

“You have to get into these never ending lines – all day, five in the morning until three in the afternoon – to see if you get a couple of little bags of flour or some butter,” said taxi driver Jhonny Mendez, 58.

“It makes a person want to cry.”

Natalia Guerra, 45, lives in a small home in Petare with eight relatives, only one of whom has a significant salary.

She remembers buying milk for her own kids but now cannot find any for her grandchildren. “We’re a big family, and it’s constantly getting harder for us to eat,” she said.

(Writing by Brian Ellsworth; Editing by Andrew Cawthorne, Toni Reinhold)

U.S. goods trade deficit narrows sharply in boost to first-quarter GDP

Freight and Cargo

WASHINGTON (Reuters) – The U.S. goods trade deficit narrowed sharply in March as imports tumbled, suggesting economic growth in the first-quarter was probably not as weak as currently anticipated.

The Commerce Department said in its advance report on Wednesday that the goods trade gap fell to $56.90 billion last month from $63.44 billion in February.

March’s comprehensive trade report, which includes services, will be released next Wednesday.

Goods imports fell 4.4 percent to $173.6 million last month, outpacing a 1.2 percent drop in exports.

The small goods deficit suggested there could be an upside surprise in gross domestic product growth for the first quarter. Economists polled by Reuters have forecast GDP rising at a 0.7 percent annualized rate in the first three months of the year.

“It suggests that first-quarter GDP growth will be much stronger than we previously believed,” said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.

“We now estimate that first-quarter GDP growth was 1.4 percent annualized, whereas we previously thought it would be only 0.8 percent.”

The government is scheduled to publish its advance first-quarter GDP growth estimate on Thursday.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. single-family home sales fell in March

A new subdivision project of residential homes in shown in Glenelg, Maryland

By Lucia Mutikani

WASHINGTON (Reuters) – New U.S. single-family home sales unexpectedly fell in March, but the decline was concentrated in the West region, suggesting that the housing market continued to strengthen.

The Commerce Department said on Monday new home sales decreased 1.5 percent to a seasonally adjusted annual rate of 511,000 units. February’s sales pace was revised up to 519,000 units from the previously reported 512,000 units.

Sales rose in the Midwest and South, but tumbled in the West and were unchanged in the Northeast.

Economists polled by Reuters had forecast new home sales, which account for about 8.7 percent of the housing market, rising to a 520,000 unit-rate last month.

U.S. financial markets were little moved by the data.

New home sales are volatile month-to-month. The decline in sales over the past three months likely does not signal a slowdown in the housing market, given a strong labor market and historically low mortgage rates.

A report last week showed a 5.1 percent surge in sales of previously owned homes in March.

The housing market is bucking a broadly weak economy, with data such as trade, industrial production, business spending and retail sales suggesting the economy lost considerable momentum in the first quarter after logging a 1.4 percent annualized growth rate in the fourth quarter.

First-quarter gross domestic product estimates are as low as a 0.3 percent rate. The government will release the advance first-quarter GDP estimate on Thursday.

The demand for housing is being fueled by a robust labor market, characterized by the lowest unemployment benefit claims since 1973, and mortgage rates near record lows. Labor market strength has increased employment opportunities for young adults, boosting household formation.

But a shortage of properties for sale, which is limiting choice for buyers and driving up prices, remains a constraint for the housing market.

Last month, the inventory of new homes on the market rose 2.1 percent to 246,000 units, the highest since September 2009. Despite the increase, new housing stock remains less than half of what it was at the height of housing bubble.

At March’s sales pace it would take 5.8 months to clear the supply of houses on the market. That was the most since last September and was up from 5.6 months in February.

New single-family homes sales surged 18.5 percent in the Midwest and climbed 5.0 percent in the populous South.

Sales plunged 23.6 percent in the West, reversing February’s 21.7 percent jump. The West has seen a sharp increase in home prices amid tight inventories.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Wall St. flat as earnings fail to excite investors

Wall Street

By Abhiram Nandakumar

(Reuters) – U.S. stock indexes were flat on Friday after poor quarterly reports from technology bellwethers Microsoft and Alphabet outweighed gains from steadying oil prices.

Microsoft was the biggest drag on all three major indexes.

Crude rose about 1 percent on signs of strong gasoline consumption in the United States. [O/R]

With recent economic data indicating a sluggish pace of economic growth globally and crude prices hovering near five-month highs, earnings have become a swing factor for stocks.

The S&P 500 has staged a sharp recovery from a steep selloff earlier this year and is inching toward its all-time high, helped by a recent rebound in oil, a cautious Federal Reserve and companies beating tempered expectations.

The index is up half a percent for the week, having posted gains on the first three days.

“We’re back to the every other day theory, bouncing around a little, but I don’t see too strong a sentiment either way,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

“It’s still a very cautious environment,” Brown said, adding that the negative tone from the quarterly reports were expected.

At 9:42 a.m. ET, the Dow Jones industrial average was up 11.91 points, or 0.07 percent, at 17,994.43, the S&P 500 was down 1.52 points, or 0.07 percent, at 2,089.96 and the Nasdaq Composite was down 35.84 points, or 0.72 percent, at 4,910.05.

Eight of the 10 major S&P sectors were higher, but the index was under pressure by a 1.4 percent decline in the technology sector

Alphabet and Microsoft were down 3.7 and 6.5 percent respectively after both missed profit and revenue estimates.

S&P 500 companies are seen posting a 7.2 percent fall in first-quarter profit, according to Thomson Reuters I/B/E/S, and shares of companies failing to beat the already lowered expectations are getting hammered.

McDonald’s rose 0.7 percent to $126.63 after the company’s profit beat estimates.

General Electric was off 1.1 percent at $30.63 after it reported lower organic revenue.

Caterpillar shares were down 0.6 percent at $78.16 after its results.

Starbucks slipped 3 percent after missing sales expectations, while Visa was down 2.3 percent after it cut full-year revenue forecast.

Advancing issues outnumbered decliners on the NYSE by 1,885 to 761. On the Nasdaq, 1,460 issues rose and 740 fell.

The S&P 500 index showed six new 52-week highs and no new lows, while the Nasdaq recorded 19 new highs and six lows.

(Reporting by Abhiram Nandakumar in Bengaluru; Editing by Don Sebastian)

Wall Street rose Monday while investors brace themselves

Traders work on the floor of the NYSE

(Reuters) – Wall Street rose on Monday, with the Dow touching highs not seen since July, as Hasbro and Disney lifted the consumer discretionary sector while investors braced for a flurry of quarterly earnings reports through the week.

Chevron climbed 1.25 percent as crude prices steadied from earlier losses caused by the collapse of talks among major producers to tackle a stubborn global surplus.

A recent rebound in oil and signs that the U.S. economy was recovering have helped stocks rally from a steep selloff earlier this year that had pushed the S&P 500 down as much as 10.5 percent.

The index is now up 2.3 percent in 2016 and only about 2 percent short of its all-time high, while the Dow breached 18,000 for the first time since July 21.

That came despite bleak expectations for first-quarter earnings reports, many of which flow in this week. Earnings of S&P 500 companies are seen falling 7.7 percent on average, with the energy sector weighing heavily, according to Thomson Reuters I/B/E/S.

Investors will closely watch IBM and Netflix as they hand in their reports after the bell. Netflix was down 3.2 percent.

“This is a market where beating and exceeding does not guarantee you a higher stock price, but missing guarantees you’re going to get killed on the downside,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa. “That’s the sign of a fragile market.”

At 2:31 pm, the Dow Jones industrial average was up 0.49 percent at 17,985.53 points and the S&P 500 had gained 0.52 percent to 2,091.54. The Nasdaq Composite added 0.34 percent to 4,955.09.

All of the 10 major S&P sectors were higher, led by a 1.2 percent rise in energy. The consumer discretionary sector was up 0.84 percent, led by Hasbro. The toymaker jumped 5.7 percent after reporting better-than-expected quarterly profit and revenue.

Disney rose 2.7 percent after “Jungle Book” dominated the weekend box office, grossing more than $100 million.

Advancing issues outnumbered decliners on the NYSE by 2,066 to 913. On the Nasdaq, 1,925 issues rose and 888 fell.

The S&P 500 index showed 19 new 52-week highs and one new low, while the Nasdaq recorded 52 new highs and 16 lows.

(Additional reporting by Abhiram Nandakumar in Bengaluru; Editing by Nick Zieminski)

Putin says shares Russians economic pain

Journalists watch a live broadcast on an electronic screen showing nationwide call-in attended by Russian President Putin in Moscow

By Andrew Osborn and Alexander Winning

MOSCOW (Reuters) – President Vladimir Putin assured ordinary Russians on Thursday that he was trying to relieve the hardships inflicted on them by the slowing economy and the financial knock-on effects of Russia’s stand-off with the West.

Putin used a televised phone-in, an annual event when he fields questions from ordinary citizens around the country, to strike a conciliatory tone on foreign policy, saying Russia wanted friendly relations with the rest of the world.

Wrapping up the event after three hours and 40 minutes, Putin said he had heard a lot of impassioned questions from worried citizens. Many of the questions were about issues such as high inflation, poor public services and wage arrears.

“I share your concerns in nearly 100 percent of cases,” Putin said. “We’ll work together so that your problems are relieved.”

Addressing public concerns over the economy is crucial for the Kremlin because Russians vote in a parliamentary election in September.

The phone-in did not feature criticism directed personally at Putin. Executives at state television, which is deferential to the Kremlin, controlled who had the chance to pose questions. His critics say the phone-in is a ritual designed to mask the lack of true democracy.

But the event provided an opportunity for Putin to show he has voters’ interests at heart, in part by hauling officials over the coals for failing to protect citizens.

Putin took questions via video link from two women, Tatiana and Yelena, who said they had not been paid for months of work at a fish processing plant on a Pacific island, and that officials ignored their complaints.

The issue is a widespread one since Russia’s economy slowed, with businesses that are struggling with falling sales often delaying wages.

The Russian president, live on air, instructed his prosecutor-general to think about firing the local prosecutor for failing to act on the women’s complaints.

“I want to extend my apologies and assure you we will do everything to resolve the situation,” Putin said, addressing the two women. A few minutes later, Russian news agencies reported a criminal investigation had been launched into the fish processing plant.

EQUAL PARTNER

On foreign policy, Putin did not deploy the kind of bellicose rhetoric against the United States and its allies that he has in the past few years.

He denied that Russia was surrounded by adversaries, said he favored a peaceful resolution of the conflict in Syria, and said Russia wanted good ties with Turkey and Ukraine, with which relations have soured.

In return, he said, he asked that foreign powers should treat Russia as an equal partner. “They should not act from a position of strength, dictate imperial ambitions,” Putin said.

He said he did not expect that Western countries would in the near future lift the sanctions imposed over Russia’s annexation of Crimea and its support for separatists in eastern Ukraine. But he said Russia’s economy would adapt.

Asked by one questioner whom he would save if Turkish President Tayyip Erdogan and Ukraine’s pro-Western leader Petro Poroshenko were both drowning in front of him, Putin was uncharacteristically diplomatic.

“If someone has decided to drown, then it’s already impossible to save them. But we are of course ready to extend a helping hand, a hand of friendship, to any partner of ours that itself wants that help,” Putin said.

POCKETBOOK ISSUES

Some of the messages submitted to the phone-in were fawning. “I’m proud of my president and of Russia,” read one message from a viewer which was flashed up on a screen behind Putin. One questioner wanted to know if Putin ate porridge for breakfast.

Most of those questions which were allowed on air focused on pocket-book issues preoccupying Russians at a time when inflation has eroded consumers’ spending power and forced the government to cut spending.

Putin was asked why more money was not being spent fixing potholes in the roads of Omsk, a city in Siberia; he was asked why medicines on sale in pharmacies were so expensive; and he reassured farmers worried they would not be able to pay off their bank loans.

He delivered a spirited defense of his friend Sergei Roldugin, who, according to reports based on the so-called “Panama Papers” leaks, has a business empire involved in offshore transactions that might be linked to Putin.

He said the leaks were an effort, backed by U.S. interests, to discredit people close to the Kremlin.

“But they must understand that the issue is not about specific people, individuals, no matter what position they hold in Russia. The issue is about the country, which cannot be manipulated, which cannot be forced to act as someone wants and dance to their tune,” Putin said.

(Additional reporting by Jack Stubbs, Lidia Kelly, Dmitry Solovyov, Maria Kiselyova, Gleb Stolyarov and Anastasia Lyrchikova; Writing by Christian Lowe; Editing by Jason Bush and Raissa Kasolowsky)

OPEC cuts 2016 oil demand growth forecast

A fuel pump is pictured at Agil gas station in Tunis,Tunisia February 3, 2016. REUTERS/Zohra

By Alex Lawler

LONDON (Reuters) – OPEC on Wednesday cut its forecast for global oil demand growth in 2016 and warned of further reductions citing concern about Latin America and China, pointing to a larger supply surplus this year.

The Organization of the Petroleum Exporting Countries also said top exporter Saudi Arabia kept output steady in March – a sign Riyadh is serious about a plan to be discussed this weekend to freeze output and support prices – while OPEC supply overall rose only slightly.

World demand will grow by 1.20 million barrels per day (bpd) in 2016, OPEC said in its monthly report, 50,000 bpd less than expected previously.

It also cited the impact of warmer weather and the removal of fuel subsidies in some countries.

“Economic developments in Latin America and China are of concern,” OPEC said. “Current negative factors seem to outweigh positive ones and possibly imply downward revisions in oil demand growth, should existing signs persist going forward.”

OPEC’s view contrasts with that of the U.S. Energy Information Administration, which on Tuesday raised its demand forecast slightly.

A third closely watched oil report, from the International Energy Agency, is due on Thursday.

A big slowdown in demand could complicate producers’ efforts to bolster prices by freezing output. The plan, to be discussed on Sunday in Doha, has helped oil prices <LCOc1> to rally above $41 a barrel from a 12-year low close to $27 hit in January.

OPEC’s refusal to cut output in late 2014 helped accelerate a drop in prices, which is slowing the development of relatively expensive rival supply sources such as U.S. shale oil and other projects worldwide.

In its report, OPEC said it expected supply from outside the group to fall by 730,000 bpd this year, more than the 700,000-bpd drop expected previously. But it reiterated that producer efforts to maintain output were making the forecast uncertain.

Despite the slightly larger non-OPEC decline expected, OPEC projects demand for its crude will average 31.46 million bpd in 2016, down 60,000 bpd from last month’s forecast.

The 13-member group pumped 32.25 million bpd in March, the report said citing secondary sources, up 15,000 bpd from February.

Saudi Arabia told OPEC it kept output in March steady at 10.22 million bpd. Riyadh in February struck a preliminary deal with fellow OPEC members Venezuela and Qatar, plus non-OPEC Russia, to freeze output.

Iran, which wants to regain market share after the lifting of Western sanctions on Tehran rather than freeze output, told OPEC it raised output by a minor 15,000 bpd to 3.40 million bpd.

The report points to a 790,000-bpd excess supply in 2016 if the group keeps pumping at March’s rate, up from 760,000 bpd implied in last month’s report.

(Reporting by Alex Lawler; editing by Keith Weir and Jason Neely)

40,000 Verizon Workers on Strike

Verizon workers take part in a rally as they negotiate a union contract in New York

(Reuters) – Tens of thousands of Verizon Communications Inc. workers walked off the job on Wednesday in one of the largest U.S. strikes in recent years after contract talks hit an impasse.

The strike could affect service in Verizon’s Fios Internet, telephone and TV services businesses across several U.S. East Coast states, including New York, Massachusetts and Virginia.

The strike was called by the Communications Workers of America and the International Brotherhood of Electrical Workers that jointly represent nearly 40,000 employees, such as customer services representatives and network technicians in Verizon’s traditional wireline phone operations.

Workers protested at various Verizon locations along the East Coast. Verizon said it had trained thousands of non-union employees over the past year to ensure no disruption in services.

While the wireline unit represents Verizon’s legacy business, it generated about 29 percent of the company’s revenue in 2015 and less than 7 percent of operating income.

Verizon’s Fios TV and Internet service is no longer growing and the company has been scaling back its landline network as it has shifts to the bread-and-butter wireless business and new efforts in mobile video and advertising.

Verizon and the unions have been talking since last June over the company’s plans to cut healthcare and pension-related benefits over a three-year period.

The workers have been without a contract since its agreement expired in August. Issues include healthcare, offshoring call center jobs, work rules and pensions.

“It’s regrettable that union leaders have called a strike, a move that hurts all of our employees,” Marc Reed, Verizon’s chief administrative officer, said in a statement on Wednesday. “Since last June, we’ve worked diligently to try and reach agreements that would be good for our employees, good for our customers and make the wireline business more successful now and in the future.”

The last contract negotiations in 2011 also led to a strike. A new contract was reached after two weeks.

On Tuesday, Verizon said it has been approached by the Federal Mediation and Conciliation Service. In the last round, the FMCS mediated their contract dispute.

“The question of federal mediation is a distraction to the real problem: Verizon’s corporate greed,” the unions said in a statement, adding it has not yet contacted the FMCS.

Verizon’s shares dipped 0.1 percent at $51.88.

(Reporting by Malathi Nayak and Rishika Sadam; Editing by Saumyadeb Chakrabarty; and Jeffrey Benkoe)

U.S. posts $108 billion dollar deficit in March

U.S. Treasury Secretary Jack Lew holds a two dollar note as he speaks during an event about currency redesign hosted by the University of Maryland in College Park, Maryland

WASHINGTON (Reuters) – The U.S. government posted a $108 billion budget deficit in March, more than double the amount from the same period last year, the Treasury Department said on Tuesday.

The government had a deficit of $53 billion in March of 2015, according to the Treasury’s monthly budget statement. Analysts polled by Reuters had expected a $104 billion deficit for last month.

Accounting for calendar adjustments, March would have shown a $102 billion deficit compared with an adjusted $89 billion deficit in March 2015.

The current fiscal year-to-date deficit was $461 billion, up 5 percent from a $439 billion deficit this time last year.

Receipts last month totaled $228 billion, while outlays stood at $336 billion.

(Reporting by Megan Cassella; Editing by Andrea Ricci)

Dollar drops to eight-month low as commodity currencies climb

Dollar Bills

By Jemima Kelly

LONDON (Reuters) – The dollar fell to its weakest since late August against a basket of currencies on Tuesday, while commodity-linked currencies climbed, as a rise in oil prices whetted investors’ appetite for riskier assets across financial markets.

The greenback has been subject to a heavy sell-off over the past month, losing 5 percent <.DXY> as investors have pushed back their expectations for when the Federal Reserve will raise U.S. interest rates after Chair Janet Yellen threw into doubt the view there could be two hikes this year.

Fed funds futures <0#FF:> imply barely one quarter point increase for the whole of 2016, with only about a 20 percent chance of a hike in June priced in.

The dollar index <.DXY>, which measures the greenback against a basket of six major currencies, fell to as low as 93.627.

With a rise in commodity prices and rallying global stocks boosting investors’ assets for riskier assets, commodity-linked currencies such as the Australian dollar <AUD=D4> and Norwegian crown <NOK=> gained strongly against their U.S. counterpart, further bruising the greenback.

“It appears that for now, markets are turning their noses up at the prospect that more gloomy earnings that might trigger some more negative risk sentiment,” said Rabobank currency strategist Jane Foley in London, adding that the dollar’s sell-off looked a little “overdone”.

Against the safe-haven yen, though, the dollar strengthened 0.3 percent, having hit a 1-1/2-year low of 107.63 yen <JPY=D4> on Monday. The yen had its strongest start to a year since 2008 in the first quarter <JPY=> as shaky global markets boosted demand for the traditional safe-haven currency.

Those gains prompted Japanese officials to warn on Monday that the yen moves were “one-sided and speculative” and that the government stood ready to intervene to weaken the currency.

But with oil prices hitting a 2016 high above $43 per barrel on Tuesday and risk appetite on the rise, the yen needed no such intervention to drive it lower. [O/R]

“(Higher) oil prices … have got the dollar on the back foot, more than anything else, so we have the yen and the dollar at the bottom, and everything else at the top,” said Kit Juckes, macro strategist at Societe Generale in London.

“I think dollar/yen will get back to 120 at some point – we might want to sell it again there, but I think this move is way overdone,” he added.

As the dollar sold off, the euro touched a six-month high of $1.1465 <EUR=>.

(Additional reporting by Ian Chua in Sydney and Hideyuki Sano in Tokyo; Editing by Andrew Heavens)