Queen Elizabeth II Passes Away at 96; More Consumers Take On Debt to Buy Groceries | NTD Business

Coming up this evening live from New York City, Queen Elizabeth II has passed away. She was Britain's longest-reigning monarch, serving as head of state for more than 70 years. And Americans are going into debt over groceries. Some consumers are now turning to buy-now-pay-later services to buy food. And the European Central Bank raises its key interest rates by a record amount to try to tame inflation. That and much more coming up on NTD Business. Great to have you with us. Don Ma here for NTD Business. Queen Elizabeth II passed away today at her castle in Scotland. She was 96 years old and Britain's longest-reigning monarch for 70 years. Her oldest son, Charles, became the UK's new king. The Queen had been struggling with health issues recently and Buckingham Palace says her family was called to her side. Elizabeth took the throne at just 25 years old. At that time, Britain was emerging from the ravages of World War II. The Queen weathered ups and downs with her husband of more than 70 years, Prince Philip, until his death last year. She leaves behind four children, eight grandchildren, and twelve great-grandchildren. While wishers gathered outside Buckingham Palace in London, the UK is now set to observe a period of national mourning. And today, Fed Chair Jerome Powell once again said the Federal Reserve is committed to fighting inflation. He said this during an interview with the Cato Institute. But this time, he's hopeful it can be done without high social costs. The last time the Federal Reserve faced inflation as high as it is now was in the early 80s. Back then, the Fed sent short-term borrowing rates to roughly 19%. This caused a deep recession at the time and high unemployment. Right now, though, the short-term rate is in a range of 2.25 to 2.5%. Economists and Wall Street traders are increasingly expecting the Fed's next rate hike to be by three quarters of a percent. If this does happen, it would be the third straight time and the most rapid series of rate hikes since the 1980s. And as inflation cuts into people's salaries, Americans are now concerned about being able to afford basic necessities like food. According to a LendingTree survey, about two-thirds of consumers have worried in the past month about affording groceries. And some consumers are starting to use buy now, pay later services just to get by. In the last year, buy now, pay later company Zip says it has seen a 95% increase in U.S. grocery purchases. Another company, Klarna, reports that more than half of the top 100 items its users are buying are groceries or household items. And earlier today, I spoke with a professional of 40 years in the investment industry. We talked about a number of things, like the health of the economy, as well as where it's headed. Here's Ted Oakley, founder of Oxbow Advisors. Ted, always great having you on the show. Just first off, I'd like to ask you about the current economy. So we have data that shows Americans are now using buy now, pay later for even daily necessities like groceries. So I wanted you to tell us, what do you think about the current health of the economy right now? Well, Don, you know, what's happening is, you know, it's starting to catch up with everything. It starts slow, slowly, and then it ekes its way on in to where people get worse and worse and worse off. And then the things that are, you know, the biggest problem they have is their costs have gone up so much that, you know, they can't make it work. They were fairly tight anyway. And so what's happening now is they're borrowing on credit cards. You'll see credit card debt go back to new highs. Buy now, pay later, like you mentioned. And then you still got a number of things ahead of you here that will probably affect it as well. I think real estate just got started on the downside, so we'll see. You know, Ted, the last time you were on, you made a pretty accurate prediction. You said that we might very likely get two consecutive quarters of negative GDP, and now we have it. So I'd like to ask you, are we in a recession? Because it seems like a mixed picture. Housing market is slowing down, but jobs market is still pretty strong. Jobless claims fell to a three-month low last week. So what do you think, Ted? Well, I think what's thrown people, Don, is that, you know, if you look at the four inputs to GDP, you know, a couple of them can be negative and throw the whole thing negative when there's parts of them that are not. For example, if you look at employment right now, typically you're not into deep recession until unemployment really moves higher. But until you get that, you're not going to really be in what I consider to be a true recession. I think it's coming, but we're not with that yet. How likely do you see that on the horizon? Well, I think it will be, I think it will be, it's hard for me to tell, but I would guess by somewhere between the fourth quarter and the second quarter of 23, we will have a couple of quarters of either zero growth or negative growth. That's what I would expect, because what I'm seeing is the consumer is getting beat up more and more, and the corporations have just started to see their profits decline. But I think they decline more and more as you go along. And so by the time you get out, let's say two or three more quarters, there should be a quarter or two in there where we have either, like I say, either zero or negative growth, I would expect. So Ted, we have a leak that the next meeting, the Fed might raise interest rates by 75 basis points a lot. How do you feel about that? Well, the same thing I've always felt about the Federal Reserve, and that is they're always late. They usually do the wrong things. There'll be some point in time where they keep on raising rates into a decline economy, and it drives you in a hole, and I think that that's coming. All right. Just one last thing. Taking everything into consideration, how do you keep your portfolio up to date? Well, for us right now, and I think people have asked this question to us, we've said you should have had, should have even still, we should have quite a bit of cash around. And I know people will say, well, I don't like having cash around. But if you look at it, you know, cash has been maybe one of the top three performers this year. So it's not something to sneeze at. And I think people need to realize that when you're in a bear market, if you can't find sectors that typically go against the grain, people will try, they'll try to. But almost every sector declines. And so you have to be careful about what you're buying. And I think what we do, though, is we can't find the things that match up for what we want. So we just wait it out till we get something. And that's where we are now. We have very high cash levels. In fact, our cash levels are the highest they've been since 99, really, for us. Well, okay. Thank you, Ted Oakley, founder of Oxbow Advisors. Always a pleasure having you on. Thank you, Don. And the European Central Bank raised its key interest rates by an unprecedented 70 basis, 75 basis points today. And they signaled further hikes in the future. Francis Maguire reports. The European Central Bank raised its key interest rates by an unprecedented 75 basis points on Thursday. The governing council today, it showed the ECB has prioritized fighting inflation, even as the bloc's economy heads for a likely winter recession. What we know is that we want to get to that 2% medium term target. And we will take the necessary steps along the way in order to get there. The move comes with inflation at a 50 year high. And as policymakers fear rapid price growth could become entrenched. Food price inflation also rose in August to 10.6%, partly reflecting higher input costs related to energy, disruptions of trade in food commodities and adverse weather conditions. The ECB also raised its inflation projections again. Next year, it changed the outlook to 5.5% up from 3.5%. Markets were not too surprised by Thursday's announcement as investors had already priced it in. But there could be even more moves on the way as the ECB confirmed further rate increases are likely. We took today's decision and expect to raise interest rates further because inflation remains far too high and is likely to stay above our target for an extended period. Some are now openly talking about a recession. And the ECB's new projections show sharply lower growth in the coming years. The economic worries have had the euro currency at around parity against the dollar for weeks, not far from a two decade low hit earlier this month. And now turning to the UK. The new Prime Minister Liz Truss is trying to help families and businesses with soaring energy costs. Energy bills there for households have nearly quadrupled. So Truss today put a cap on how much a family will pay each year for energy. From the 1st of October, a typical household will pay no more than 2,500 pounds per year for each of the next two years while we get the energy market back on track. And that equals about 240 dollars per month. Businesses will get a similar guarantee for six months. Truss said the move could cut inflation by up to 5 percentage points. By comparison, the UK's inflation is currently at 10%. But for those firms that are producing the energy, if they can only charge a certain price, how are they going to deal with higher costs themselves? Well, Truss says the government will step in and provide them with liquidity worth about 46 billion dollars. She also wants to increase the UK's domestic energy supply in the long term, including lifting a ban on fracking and licenses for new oil and gas exploration in the North Sea. We will end the moratorium on extracting our huge reserves of shale, which could get gas flowing as soon as six months, where there is local support for it. We are also accelerating all sources of domestic energy, including North Sea oil and gas production. We will be launching a licensing round, which we expect to lead to over 100 new licenses being awarded. Truss says she doesn't want the UK to be dependent on the global energy market anymore, so she set a goal to be a net energy exporter by 2040. Britain was a net exporter of energy from the late 80s to 2004, but production steadily declined from a peak in 1999. Now, it imports about 40% of the energy it uses. Wall Street's main indexes posted gains today. The Dow rose 193 points, or 6 tenths of a percent. S&P gained 26 points, or 7 tenths of a percent. The Nasdaq added 70 points, or 6 tenths of a percent. And the Pentagon says it's putting a pause on deliveries of a popular fighter jet. Defense Department officials discovered that Lockheed Martin's F-35 combat jet has a part made in China. This is against regulations, but the Pentagon says the component does not pose any national security issues. The part in question is an alloy used in the jet's turbo-machine pumps. It will be replaced by one from an approved vendor. The F-35 is widely used in the U.S. military, with versions made for the Air Force, Marines, and the Navy. Pentagon officials say the issue will be resolved as soon as possible so aircraft deliveries can resume. And moving on. El Salvador was supposed to be where the world's first cryptocurrency city was meant to be built. But even a year after El Salvador adopted Bitcoin as legal tender, the city is still very much a dense jungle when it comes to the cryptocurrency space. Angela Johnston reports. This sleepy area in the shadow of El Salvador's Conchagua volcano was set to become a bustling cryptocurrency hub. But nearly a year after big promises about Bitcoin City, Reuters found no heavy machinery, construction workers, or raw material to indicate any progress. People have started working from scratch and started small businesses on the beach. That's all the tourism we have. President Nayib Bukele had promised Bitcoin City would be a tax haven for crypto enthusiasts. Instead, for many, it's become a symbol of folly in one of the poorest countries in Latin America. When El Salvador adopted Bitcoin as legal tender last September, the cryptocurrency was close to $47,000. It's recently been worth less than half of that, trading at just under $20,000. The price drop has also elevated El Salvador's financial risk, complicating its search for $1.6 billion in sovereign bonds. Use of the digital currency has had trouble catching on, along with the government's Bitcoin wallet, Chivo. Neither the presidency nor the finance ministry would share figures on the wallet's use. But a survey by the National Bureau of Economic Research, a US-based NGO, found only 20% of people who downloaded the app kept using it after spending a free $30 credit from the government. Almost no one has downloaded it this year. The survey from the NGO found people don't understand Bitcoin and they don't trust it. And Macy's expects another early start to the holiday shopping season this year. But other retailers like Best Buy have a different prediction. Supply chain disruptions prompted consumers to start shopping as early as October during the last two years. So, Macy's doesn't expect the trend to change and is giving discounts to encourage discretionary spending. But Best Buy, on the other hand, expects shoppers to return to their usual holiday shopping patterns this year. Macy's and a host of other retailers cut their annual earnings forecast last month. And it looks like it's getting more expensive to own and care for pets. New data suggests inflation and the slowing economy are making a real impact on pet owners' wallets. So, is the big splurging on pets we saw during the pandemic coming to an end? We take a look at why both retailers and Wall Street are really concerned about a shift in pet spending. Spoiled pets feeling the inflation pinch. New data indicating pet owners might be splurging less on their furry companions. Wall Street, retail stores and pet shelters all showing possible signs that the slowing economy is impacting spending habits for dog and cat owners. Prices have skyrocketed. People can't even pay for their own groceries, so let alone care for their pets. Shares of online retailer Chewy are down more than 35 percent this year. The drop leading some investors to wonder whether surging inflation could impact sales and earnings. Meanwhile, retail giants Walmart and Target reporting consumers are now spending mostly on essentials. This trend could extend to pet owners who may focus more on things like food and less on discretionary items like toys. There's inflation and the cost to care for animals. There's a fear about supply chain. According to the National Retail Federation, the pandemic gave pet supply retailers a boost as many pet owners were stuck at home and spent more money on their four-legged family members. But now there's growing evidence the pandemic error of splurging on pets could be over. Pet shelters like this one in Georgia are reporting a growing number of pet surrenders. But also a surge in owners needing help with basics for their pets like food and veterinary care. Pozzolana has a pet food bank where, you know, anyone from the community can come to get free pet food for their dog or cat. And still to come, don't go away. United Airlines investing millions of dollars in electric air taxis. They could revolutionize your commute. And South Korean tech giant LG displays a high-tech way to care for your favorite footwear. That and more coming up on NTD Business. And welcome back. Have you ever seen an electric air taxi? It looks just like something straight out of the Jetsons. Remember that cartoon from the 60s? United Airlines is pumping in 15 million dollars into getting 400 of these. The vehicle is called an EVTOL, which is short for electric vertical takeoff and landing. It could change the way people commute. United says the vehicles have a range of 60 miles. And one of the makers is working on an air traffic management system to allow these air taxis to be operated safely in the sky. Apple made some big announcements last night. So let's hear more from NTD's Andrew Thomas on some of the products like the iPhone 14 and the new Apple Watch Ultra. Apple's new iPhone 14 features an always-on display, an updated camera, and a dynamic island. The island is an adaptable black bar that covers the face scanner on the front of the phone. A tech researcher says that's not all. Well, I think the biggest news for me was the release of the satellite service for iPhone 14. There's been rumors of this honestly for about a year and a half and it wasn't clear whether or not they were going to actually do it. Apple said its satellite SOS will work with emergency responders. Users will be able to share their location via satellite when they have no other connectivity. The service will be free for two years with the iPhone 14. It's not something that everybody needs but I think it's a thing that everybody would like to have because you never know when you're going to get caught in a particular situation and knowing that you have that safety net to potentially get in contact with someone if you are, God forbid, stuck it's a big deal. Apple's new iPhone 14 products are the same prices as their predecessors ranging from about $800 to $1,100. The smartphones will be available for pre-order starting September 9th but the updated iPhone Pro line won't be available until September 16th. Apple is also releasing new Apple Watches including a new Watch Ultra model aimed at extreme sports and diving. The Ultra has a bigger battery to last through events like triathlons, better waterproofing and temperature resistance for the outdoors, and better GPS tracking for sports. To get that capability as a potential is certainly going to be attractive to a certain group of people and again if you're a hardcore hiker or you know ultra marathoner then that kind of stuff is going to be cool. The Ultra will start at nearly $800 and will be available September 23rd. Andrew Thomas, NTD News. And South Korean tech giant LG is showcasing a high-tech shoe case at the IFA Consumer Electronics Fair in Berlin. NTD's Andrew Thomas again shows us more. The LG Styler shoe case maintains optimal temperature and humidity. The app-controlled modular box is also fitted with a 360-degree view turntable and customizable lights. If you need like special protection from the light for designer shoes or your favorite shoes and you don't want to get them damaged by the light or by the inappropriate temperature, yeah then it will adjust. LG has paired the shoe case with its shoe care unit. The device uses TrueStream technology to reduce odors and bacteria. Its two compartments offer dual care options, meaning different types of shoes can be treated at the same time. They are two separate cabins that run programs via the ThinkQ app. Yeah, you can pick them and adjust. They're also customizable to your own needs and upgradable if any upgrade comes. The products are sure to be a hit with sneaker enthusiasts who want to keep their kicks in optimal condition and others who want to show off their collections. Probably sneaker heads are going to be interested. Yeah, and also people who just like to show off some and have design issues to show off, right? IFA Berlin opened to the public on September 2nd and ends this week. Andrew Thomas, NTD News. So Labor Day is officially in the rear view mirror and now as the fall season approaches, all we see up ahead is pumpkin spice everywhere. But let me ask you, is this taking it a bit too far? Because Nissin's Cup Noodles is releasing a pumpkin spice flavor this October. It's going to be sauced with a special pumpkin spice seasoning. Nissin says it's the perfect blend of sweet and savory and spiced. The company also suggests you put some whipped cream on it as you eat it. The noodles will be available on shelves in select Walmarts next month. And that's all the stories we have today from the NTD business team. Myself, Don Ma. You can follow me on Twitter as well. If you have any news tips or feedback for the show, you can email us at business at ntd.com. That's all for today. Thanks for watching. We'll see you tomorrow.