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Post by thelivyjr » Wed Oct 09, 2019 1:40 p


"Fed’s Powell says planned bond buying isn’t emergency stimulus; investors are skeptical"

By Chris Matthews

Published: Oct 9, 2019 2:35 p.m. ET

During a week dominated by often troubling news on the international trade front, equity investors were provided some relief Tuesday by a figure who has sparked more than one stock-market rally in recent months: Federal Reserve Chairman Jerome Powell.

During a speech and question-and-answer session at conference for the National Association of Business Economists in Denver, Powell announced that the central bank would soon start expanding the size of its balance sheet, adding bank reserves to the financial system to avoid a recurrence of the unexpected strains seen in short term money markets last month.

The news helped spark a short-lived rally equity prices on Tuesday as equity investors welcomed the news that the Fed would soon start buying government debt on a regular basis again, before concerns over the U.S. - China trade dispute reversed those gains in the closing hour of trade.

U.S. stocks were higher early Wednesday as optimism rose again about prospects for a U.S. China trade deal.

But Powell’s comments have sparked a debate among market watchers as to whether the move by the Fed is another form of stimulus, or “quantitative easing,” (QE) rather than the quotidian actions of a central bank attempting to keep the plumbing of the financial system operating smoothly.

“I think what the Fed Chairman decides to call it is inconsequential,” Yousef Abbasi, global market strategist for U.S. institutional equities at INTL FCStone told MarketWatch.

“From what’s been discussed, it’s exactly what was once called QE."

"They would be buying securities and increasing liquidity and that is easing."

"However you want to refer to it, ultimately it’s supportive of equities,” he said.

Mike O’Rourke, chief market strategist at JonesTrading said in an interview that balance-sheet expansion may be different because it will involve the purchasing of short-term government debt rather than long-term debt, but that the effect is to enable private banks to maintain larger balance sheets and take on more risk.

“This is very QE-like,” he said.

In August Fed officials stopped allowing their balance sheet to shrink as U.S. Treasury securities on their books matured, but banks have been running down their reserves as they bought new debt being issued by the U.S. Treasury to fund the federal government’s nearly $1 trillion budget deficit.

Reserves dropped to less than $1.4 trillion last month, from $2.8 trillion in 2014, when the Fed stopped buying assets.

As a result the lack of liquidity in short term money markets caused overnight interest rates to spike well above the interbank fed funds rate last month.

The Fed now wants to provide enough bank reserves so the central bank can control its policy federal-funds rate and other short-term lending rates without the regular market intervention it has undertaken over the past three weeks.

Powell emphasized that the Fed is contemplating buying short term debt only as a result, rather than the longer maturity debt bought after the financial crisis.

Part of the debate centers on what “normal” or “organic” management of the Fed’s balance sheet looks like.

Those who see the Fed’s announcement as unremarkable point to the fact that during the five years prior to the financial crisis, the Fed’s balance sheet grew at a steady 4% annual clip, on average.

But after years of large-scale bond buying in the aftermath of the 2008 crisis, reverting to that same level of growth on a percentage basis necessarily means the Fed will be a much more active buyer of government debt, perhaps to the tune of about $10 billion per month.

“The problem the Fed has is convincing markets this isn’t a QE4, designed to drive long rates lower,” wrote Paul Ashworth, chief U.S. economist at Capital Economics, in a research note.

“Powell pleaded [Tuesday] that this balance sheet management should ‘in no way be confused with’ large-scale asset purchases."

"But it’s hard to communicate that effectively when the Fed’s organic balance sheet growth will be half the size of the European Central Bank’s newly unveiled QE.”

In other words, with a Fed balance sheet that has apparently been permanently increased relative to the size of the economy, the central bank’s role in financial markets has also been permanently increased.

Some analysts worry that this new outsized role for central banks have made markets complacent.

Torsten Slok, chief economist at Deutsche Bank Securities warned in a Tuesday note to clients that stock market performance is “no longer being driven by economic fundamentals, but instead by [the Federal Reserve] and [European Central Bank’s] promises of lower rates, more dovish forward guidance.”

Alec Young, managing director of global market research at FTSE Russell, however, argued that economic and corporate fundamentals will always, eventually, matter.

“The Fed is in important backstop for the market, but it’s not a panacea,” he told MarketWatch.

“Fed easing can soften the blow from trade-driven global slowdown, but it can’t completely reverse it.” ... 2019-10-09

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Post by thelivyjr » Wed Oct 09, 2019 1:40 p


"Fed grew more worried about economy at September meeting, minutes show"

By Greg Robb

Published: Oct 9, 2019 3:53 p.m. ET

Federal Reserve officials were more worried about the U.S. economy by the time they met in mid-September, according to minutes of the central bank’s meeting released Wednesday.

“Participants generally judged that downside risks to the outlook for economic activity had increased somewhat since their July meeting, particularly those stemming from trade policy uncertainty and conditions abroad,” the minutes said.

There was even talk about possible recession, with several Fed officials noting that the probability of a recession “had increased notably in recent months.”

Even the Fed research staff had grown more worried.

While the staff’s official forecast still showed the economy growing slightly above a 2% annual rate this year and next and slightly below 2% in 2021 and 2022, signs had emerged that gave them pause.

“Softness in business investment and manufacturing so far this year was seen as pointing to the possibility of a more substantial slowing in economic growth than the staff projected,” the minutes showed.

A few weeks after the Fed meeting, a worse-than-expected reading in the ISM’s manufacturing sector gauge heightened investors concerns that a recession could hit the economy, but these fears ebbed somewhat after the September employment report showed that the unemployment rate hit a new 50-year low reading of 3.5%.

During their meeting, a few Fed officials pledged to be vigilant about signs of a softening in the labor market.

“One risk that the economy faced was that the softness recorded of late in firms’ capital formation, manufacturing and exporting activities might spread to their hiring decisions, with adverse implications for household income and spending,” the minutes said.

“Participants observed that such an eventuality was not embedded in their baseline outlook,” the summary added.

Fed officials were divided about whether to cut interest rates.

They eventually agreed, by a 7-3 vote, to trim its benchmark rate by a quarter percentage point to a range between 1.75% and 2%.

That was the second straight meeting with a rate cut.

A couple of Fed officials said they thought rate cuts might “help forestall” layoffs.

During the deliberations, many officials thought the Fed should stand still and await further developments.

“They contended that the key uncertainties were unlikely to be resolved anytime soon,” the minutes said.

A “few” wanted the Fed statement to address when the easing in response to the trade uncertainty would end.

Only two Fed officials wanted an aggressive half percentage point cut which they said would reduce the risk of an economic downturn.

The minutes said little new about the plans by policy makers for future rate cuts.

The central bank will meet again on Oct. 31.

Only seven of 17 officials had backed another cut by the end of the year, according to their “dot-plot” interest rate projections.

Roberto Perli, an analyst for Cornerstone Macro and a former Fed staffer, said he thought a possible base case for the October meeting is that the Fed will cut rates by another quarter point but then add language to the statement to signal that the bar for additional cuts is getting higher.

“That would also be a way to address to obvious divisions inside the committee about the desirability and extent of future rate cuts,” Perli said.

Fed Chairman Jerome Powell said Wednesday the central bank was operating on a meeting-by-meeting basis and would act as appropriate to sustain the expansion.

Investors have little doubt the Fed will cut interest rates again after their Oct. 29-30 meeting.

The probability of a rate cut is now slightly above 80%, according to the CME Group’s FedWatch tool.

The odds of an easing jumped after the ISM manufacturing sector data was published last week.

According to the minutes, officials discussed the strains in the short-term money markets that many analysts have tied to the Fed’s program to shrink its balance sheet.

But the discussion in the minutes is now a bit stale since Powell announced Tuesday that the Fed would “soon” start expanding the size of its balance sheet by purchasing short-term Treasury bills.

One important note, not mentioned by Powell, was that “several” officials supported consideration of a “standing repurchase agreement facility” to combat future market volatility from a lack of short-term liquidity.

Many economists think such a program could be up and running by early 2020.

Stocks were higher after the minutes were published on Wednesday on hopes of progress in U.S. and China trade talks. ... 2019-10-09

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Post by thelivyjr » Wed Oct 09, 2019 1:40 p


"U.S. job openings fall in August to a 1 1/2-year low as hiring and the economy slow"

By Jeffry Bartash

Published: Oct 9, 2019 4:28 p.m. ET

The numbers:

The number of job openings nationwide fell in August for the third straight month and hit a one-and-a-half-year low, coinciding with a decline in hiring that’s taken place against the backdrop of a slowing U.S. economy.

Job openings slipped to 7.05 million in August from 7.17 million in the prior month.

Although the number of jobs openings still easily exceeds the 5.8 million Americans officially classified as unemployed, they’ve declined almost 8% since the start of the year.

“If this trend continues, we’ll dip below 7 million soon,” said Nick Bunker, an economist at Indeed Hiring Lab.

What happened:

Openings fell the most in manufacturing and information services such as media and public relations, the Labor Department said Wednesday.

More job openings were available in trade, transportation and construction.

The share of people who left jobs on their own, known as the quits rate, slipped to 2.6% in August from 2.7% among private-sector employees.

The revised figure for July marked a post 2008 recession high.

Workers are more likely to quit one job for another when times are good, but stay in their current jobs when times are hard.

Typically workers who move end up getting better pay.

The quit rate for private-sector workers bottomed out at 1.4% at the end of the 2007-2009 Great Recession and has hovered at or near a cycle peak of 2.6% for the past year.

Big picture:

The number of job openings has gradually declined since hitting an all-time high of 7.63 million at the start of 2019.

The pullback has taken place at the same time that hiring slowed.

Whereas many companies had trouble finding suitably skilled workers a year ago, they’re finding enough to fill critical positions, Bunker said.

What’s changed is that firms are looking to fill fewer positions overall.

The U.S. added an average of 157,000 new jobs a month during the third quarter stretching from July to September, down from 226,000 in the final quarter of 2018.

Economists say a slowdown in the world economy, exacerbated by the trade fight between the U.S. and China, has played a big role in curbing growth.

The positive effects of the Trump tax cuts and a burst of federal spending last year have also waned.

Now economists worry the ongoing trade fight might trigger a recession unless tensions ease soon.

What they are saying?

The number of job openings continue “to tell a positive story about the state of the labor market, but it is not as impressive as it was at the same time a year ago before trade tensions, the government shutdown and impeachment mania began to take a toll on the economy,” said Ward McCarthy, chief financial economist at Jefferies LLC.

Market reaction:

The Dow Jones Industrial Average and S&P 500 rose in Wednesday trades, halting at least temporarily a recent slide.

The 10-year Treasury yield edged up to 1.55%.

The yield has sunk from a seven-year high of 3.23% one year ago on worries about the economy. ... 2019-10-09

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Post by thelivyjr » Wed Oct 09, 2019 1:40 p


"Militia Commander Says It Will Attack Turkish Forces if They Enter Syria"

Ben Hubbard, Carlotta Gall and Eric Schmitt

9 OCTOBER 2019

BEIRUT, Lebanon — The commander of the American-backed militia in Syria said Tuesday that it would attack Turkish forces if they entered northeastern Syria, while Turkey’s president, Recep Tayyip Erdogan, indicated that such an operation was imminent.

“We will resist,” Mazlum Kobani, commander of the Kurdish-led militia, said in an interview with The New York Times.

“We have been at war for seven years, so we can continue the war for seven more years.”

Mr. Erdogan, speaking to reporters on a flight to Serbia, said the operation might happen before the news could be printed.

Turkish troops were being bused to the Syrian border in preparation for an incursion, Turkish media reported.

And the Turkish Defense Ministry said on Twitter that preparations to enter Syria “had been completed.”

The escalating challenge came after President Trump agreed to let the Turkish operation go forward and to move American troops out of the way.

On Monday, American troops withdrew from posts near two Syrian towns near the border.

The threat of armed resistance from the militia, a force trained and armed by the United States, raises the risks for Turkey as it weighs sending troops into Syria, and for the United States, which could find itself on the sidelines of a new front in Syria’s war — this time between two of its allies.

There was still confusion among allies and American officials about the administration’s policy as set out in seemingly contradictory statements by Mr. Trump and administration officials, and American officials said Tuesday that some senior Pentagon officials had been blindsided by the decision to pull American forces back from the border.

The Kurdish-led militia, the Syrian Democratic Forces, or S.D.F., partnered with the United States to defeat the Islamic State in Syria.

Since then, the militia, with American backing, has retained control of a large swath of northeastern Syria.

Turkey considers the militia part of a Kurdish guerrilla movement that threatens Turkey, and Mr. Erdogan has demanded a 20-mile-deep buffer zone along the border that Turkey would control to keep back any Kurdish forces.

Speaking by telephone from Syria, Mr. Kobani said he had been frustrated by the White House’s announcement on Sunday that the United States would stand aside for a Turkish incursion, and that the lack of clear, predictable policies from Washington had made it hard to plan.

“There should not be any ambiguity,” he said.

He spoke of United States troops who had helped his forces fight the Islamic State as comrades-in-arms and said any rupture in that partnership could destabilize the region.

“We fought with U.S. forces to get rid of terrorism, and we are still in this continuing battle,” he said.

He called on Americans to “put pressure on their political and military leaders to stop the Turkish attack,” which he said would lead to “big massacres.”

Mr. Trump said Sunday that the United States would not block a Turkish advance.

But on Monday he said that he would “obliterate” Turkey’s economy if its military did anything “off limits,” without defining what that meant, and his aides insisted that he had not given a green light to an invasion.

On Tuesday, he said that he had invited Mr. Erdogan to visit the White House next month.

Two American officials, speaking on condition of anonymity to discuss private diplomatic and military conversations, said that given the apparently contradictory statements by Mr. Trump, the Turks seemed flummoxed about what support, if any, they might get from the United States.

As a result, they may be rethinking what to do next, the officials said.

Still, several American officials said they expected a Turkish incursion to begin Wednesday, even in the face of congressional blowback.

Senator Lindsey Graham, Republican of South Carolina, said in a tweet directed at Turkish officials that they “do NOT have a green light” to advance and that “there is massive bipartisan opposition in Congress, which you should see as a red line.”

Turkish news media reported that Turkey’s armed forces were preparing F16 jets and Howitzers.

Special forces troops were arriving in buses at the border crossing of Akcakale just across from the Syrian town of Tel Abyad, and cranes were moving into position to lift concrete barriers at the border.

Tel Abyad was one of two towns evacuated by American forces on Monday.

The other was Ras al Ain.

American officials said Tuesday that Turkey had amassed several hundred troops, including tanks and other armor, near the two towns.

Political analysts with knowledge of the plan worked out with American officials said Turkey planned to set up four bases or combat posts in a narrow area along the border, and had agreed to stick to a limited action as a first stage.

“I would expect Turkey to implement a graduated incursion, then go back to negotiation with the U.S. from a stronger position,” said Ozgur Unluhisarcikli, Ankara director of the German Marshall Fund of the United States.

“Then when it is in a better situation, do a second operation, and a third."

"That is a graduated strategy.”

Mr. Trump’s argument that pulling United States forces from Syria was a fulfillment of his vow to get Americans out of “endless wars” unleashed a wave of criticism, much of it from Republican lawmakers.

Many argued that withdrawing the roughly 1,000 United States troops in northeastern Syrian would open a void that could be exploited by President Bashar al-Assad of Syria or his Russian and Iranian allies, or by the Islamic State.

Mr. Trump has not ordered a full withdrawal from Syria.

The order on Sunday was only to relocate roughly 100 to 150 troops that had been stationed near the Turkish border.

About two dozen were pulled back on Monday.

But analysts feared that any redeployment of Kurdish troops to fight Turkey in the north would take them away from the battle against the Islamic State.

The Islamic State was driven from its last territory in Syria in February, but the S.D.F., with the support of American Special Operations Forces, continue to battle the group’s remnants.

The American officials said the S.D.F. was already beginning to move off some of its counterterrorism missions against the Islamic State.

“The danger of ISIS is real,” Mr. Kobani said, adding that it maintains sleeper cells throughout the territory.

His forces also oversee prisons and camps holding tens of thousands of former Islamic State fighters and their families, which Mr. Trump has said Turkey could take over.

Mr. Kobani said there had been no conversations with the United States about handing over these prisoners to Turkey and he called the idea “impossible.”

Mr. Kobani said that he would prefer that the United States remain in Syria until the Islamic State and its remnants are destroyed and the country reached a “complete political solution that guarantees everyone’s rights.”

The Pentagon on Tuesday challenged published accounts asserting that Mr. Trump’s decision to order American troops to pull back from the border surprised many Defense and State Department officials.

Defense Secretary Mark Esper and Gen. Mark Milley, the new chairman of the Joint Chiefs of Staff, “were consulted over the last several days by the president regarding the situation and efforts to protect U.S. forces in northern Syria in the face of military action by Turkey,” said Jonathan Hoffman, a Pentagon spokesman.

Several Pentagon officials confirmed that there had been discussions about Mr. Erdogan’s threats to invade northern Syria, but said that they had no hint that Mr. Trump was going to order American troops to step aside and leave their Syrian Kurdish allies vulnerable to attack.

In fact, the officials said, both Mr. Esper and General Milley warned their Turkish counterparts last week that any such cross-border operation would seriously damage United States-Turkish relations.

American commanders had expected to have some advance notice before Turkey launched an operation in northern Syria, and said they would probably have pulled back American forces to avoid advancing Turkish troops.

But until Mr. Trump’s order on Sunday, there were no plans to pull back pre-emptively, the officials said.

In a tweet on Tuesday, Mr. Trump insisted that he was not betraying the Kurds.

“We may be in the process of leaving Syria, but in no way have we Abandoned the Kurds, who are special people and wonderful fighters,” he said.

He warned that “any unforced or unnecessary fighting by Turkey will be devastating to their economy and to their very fragile currency.”

Mr. Kobani says he would prefer to stick with the United States and work for a stable Syria, but that his forces are ready to attack if Turkey invaded.

“There will be lots of resistance if they cross the border,” he said.

“We will not accept them on our land in any way.”

Ben Hubbard reported from Beirut, Carlotta Gall from Istanbul, and Eric Schmitt from Washington. Reporting was contributed by Mustafa Ali and Hwaida Saad. ... P17#page=2

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Post by thelivyjr » Wed Oct 09, 2019 1:40 p


"Turkey launches offensive against U.S.-allied Kurdish forces in northern Syria"

Kareem Fahim, Sarah Dadouch, Asser Khattab

9 OCTOBER 2019

ISTANBUL —Turkey’s government launched a long-expected offensive into northeastern Syria on Wednesday, with airstrikes and shelling targeting Syrian Kurdish fighters who have played a central role in aiding the U.S.-led battle against the Islamic State militant group.

The operation — with some ground forces crossing the border later — came just days after President Trump’s startling announcement that the United States would not stand in Turkey’s way, bringing sharp rebukes from even the president’s Republican allies.

The Turkish foray threatened to further fracture a war-shattered Syria as Ankara moved to create a “safe zone” after failing to agree on its size and nature during negotiations with the United States.

Turkey’s goal is to push back the Syrian Kurds — considered enemies by Turkey — from the border region.

Turkey also claims the buffer region would be fit for the resettlement of millions of Syrian refugees residing in Turkey.

But aid agencies warned the offensive could create a new humanitarian crisis, as well as a fresh wave of displaced people and refugees.

An even greater worry was the thousands of Islamic State prisoners and their families held by the Syrian Kurdish forces after the fall of the militant group’s self-declared “caliphate.”

A security breakdown at the detention camps could open the way for the fighters and others to slip away.

Already frightened people were on the move in Syria.

Cars, trucks and motorcycles — with no empty seats — streamed away from the border.

Black smoke rose from some buildings.

Random fires broke out.

Some Turkish ground forces moved into Syria after nightfall.

A statement from the Turkish military said a “land operation” began in an area east of the Euphrates River, but gave no further details on the scope of the incursion.

President Trump called Turkish offensive was “a bad idea,” but also stood by his decision to pull back U.S. forces to effectively clear the way for Turkey.

“Turkey has committed to protecting civilians, protecting religious minorities, including Christians, and ensuring no humanitarian crisis takes place,” he added.

“We will hold them to this commitment.”

The past weeks have seen a buildup of Turkish forces on the border, belligerent speeches by Turkish officials, and dire warnings from Turkey’s NATO allies and others.

In the first hours of the operation, Turkish warplanes and artillery shelled towns along a 250-mile swath, stretching from Ain Issa, about 30 miles from the Euphrates River to Malikiyah, near Syria’s border with Iraq.

Turkish shelling killed at least five civilians, according to the U.S.-allied Syrian Democratic Forces (SDF), as the Syrian Kurdish-led militias are known.

Mortar fire from Syria landed in at least two Turkish towns, but caused no injuries, Turkish media reported.

The offensive has presented the Trump administration with a dilemma as it has sought to balance Washington’s partnership with Turkey and its links to the Syrian Kurdish forces that helped beat back the Islamic State.

Ankara views the Syrian Kurdish fighters as terrorists because of their links to Turkey’s Kurdistan Workers’ Party, or PKK, which has waged a decade-long battle in southeastern Turkey for greater autonomy.

Turkey has launched cross-border attacks on PKK bases in northern Iraq since the 1990s.

A spokesman for Erdogan, Fahrettin Altun, writing in The Washington Post on Wednesday, called for international support for Turkey’s offensive.

“Turkey has no ambition in northeastern Syria except to neutralize a long-standing threat against Turkish citizens and to liberate the local population from the yoke of armed thugs,” Altun wrote.

The coming days would make clear whether Turkey intended to conduct a symbolic push across the frontier, or follow through with plans to move deeper into Syrian territory, analysts said.

As the battle approached, residents of Syria’s border towns braced for the worst.

Mikael Mohammed, a Kurdish father of three who owns a clothing store in Tal Abyad, a quarter-mile from the Turkish frontier, said he had not had any customers for an entire day.

U.S. troops based in the town withdrew early Monday after the White House announcement.

“People who are out there in the streets look as if they are going to someone’s funeral …"

"People are scared,” he said.

The town used to feel safe “when we used to see U.S. troops in the streets of Tal Abyad.”

“Yesterday, we saw U.S. troops, but this time they were on their way out of the area, and that terrified people,” he said.

By Wednesday afternoon, worry had turned to dread.

“Turkish warplanes have started to carry out airstrikes on civilian areas."

"There is a huge panic among people of the region,” Mustafa Bali, a spokesman for the SDF, wrote on Twitter.

Turkey had conducted airstrikes about 25 miles into Syrian territory, according to another SDF statement.

In the town of Qamishli, the SDF traded fire with Turkish forces across the border, according to a farm owner who spoke on the condition of anonymity to avoid possible reprisals.

Residents hoarded food and lined up at gas stations.

People had started leaving the town, headed further away from the Turkish border, he said.

Apart from scattered skirmishes, the SDF did not appear to be mounting a full-fledge counter attack, according to Dareen Khalifa, senior Syria analyst for International Crisis Group.

“My understanding is that they are still hoping that this would be a strictly limited operation that would not spread to any Kurdish towns, and that they would be able to continue to keep U.S. protection,” she said.

“This is a battle the would surely lose,” she added, referring to the SDF.

“The flat typography favors conventional warfare.”

Erdogan’s government has watched nervously for years as Syria’s Kurds have built an autonomous enclave along Turkey’s border.

It railed against the United States for relying on the Kurds as a military partner and bristled as their enemies accumulated weapons and territory.

For years, the United States and Turkey have been engaged in tortured negotiations aimed at soothing Ankara’s security concerns.

There was also the risk that American troops still positioned in Syria could get caught in the crossfire.

A U.S. official said the Trump administration had provided Turkey with a list of no-strike locations where U.S. personnel were stationed.

The International Rescue Committee warned that two million civilians who lived in the military zone were at risk — “many of whom have already survived ISIS brutality and multiple displacements,” the group said in a statement, using an acronym for the Islamic State.

The offensive threatened to displace as many as 300,000 people, the group said.

Already, there were reports of people fleeing the fighting “with only the clothes on their backs.”

DeYoung reported from Washington and Khattab from Beirut. Sarah Dadouch and Liz Sly in Beirut and Louisa Loveluck in Irbil, Iraq, contributed to this report. ... P17#page=2

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Post by thelivyjr » Thu Oct 10, 2019 1:40 p


"Stocks notch consecutive gains as Trump plans to meet China’s chief trade negotiator"

By Mark DeCambre and Sunny Oh

Published: Oct 10, 2019 4:17 p.m. ET

U.S. stocks advanced Thursday for a second straight day after President Donald Trump said he would meet China’s chief trade negotiator at the White House, again raising hopes for progress from two days of talks in Washington in an effort to resolve the two-year-old trade war.

How did the benchmarks perform?

The Dow Jones Industrial Average rose 150.66 points, or 0.6%, to 26,496.67.

The S&P 500 index climbed 0.6%, or 18.73 points, to 2,938.13.

The Nasdaq Composite Index picked up 47.04 points, or 0.6%, to finish at 7,950.78.

At session highs, the Dow was up 257.30 points, the S&P 500 had risen 28.98 points and the Nasdaq had gained 79.1 points, all of which amounted to advances of about 1%.

Despite two days of gains, the Dow has lost 0.3% week-to-date, while the S&P 500 and Nasdaq are on pace to post 0.5% and 0.4% weekly losses, respectively.

What drove the stock market?

Trump tweeted that he would meet Chinese Vice Premier Liu He on Friday to advance a trade deal, bolstering hopes that the U.S. was looking to strike a resolution soon.

Liu is meeting with U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin in Washington, with the hope that the parties can resolve, at least partially, tensions over trade that have stoked anxieties on Wall Street, though it is unclear if a substantive agreement can be achieved.

If Trump’s meeting with Liu takes place, it could assuage concerns among market participants who were whipsawed by conflicting overnight headlines on Thursday, including reports from the South China Morning Post suggesting that the China delegation would leave Washington on Thursday, a day earlier than had been planned.

However, a White House spokesperson later told CNBC that no change of plans had occurred with Beijing’s representatives.

Bloomberg News reported that the White House may implement a previously agreed upon currency deal with China ahead of schedule, and suspend tariff hikes to 30% from 25% scheduled to take effect Oct. 15 on some $250 billion in Chinese products.

Those moves would be part of a first-phase agreement with China, the report said, with negotiations on critical issues such as intellectual-property rights and forced technology transfers coming at a later time.

Separately, the New York Times reported Wednesday night that Trump had approved issuing licenses to some U.S. companies to conduct business with Chinese telecom giant Huawei Technologies.

The U.S. blacklisted Huawei earlier this year, and allowing sales of non-sensitive products could help defuse trade tensions.

“If Trump and Liu He do meet, it’s clearly a positive to the market,” said Quincy Krosby, chief market strategist at Prudential Financial.

“At this point, the market would be satisfied with the continuation of talks as long as tariffs do not increase next week."

"But we’ve had dress rehearsals for this where the meetings don’t take place.”

“Last night’s headlines was reminiscent of the chaos around the Chinese delegation canceling their visit to farms in the heartland."

"Like then, we had different explanations for that,” said Krosby.

In economic data, U.S. consumer price inflation was little changed in September, giving the Federal Reserve room to cut interest rates in late October.

Weekly jobless claims fell in early October.

Investors also saw some comfort in commentary from Dallas Fed President Robert Kaplan, who said he’s open-minded on the outlook for further rate cuts.

The central bank has already cut its benchmark interest rate by a half percentage point this year.

Which stocks were in focus?

PG&E Corp.’s stock plunged 29.1% after a judge ruled to allow for a competitive bankruptcy plan, opening up the path for Elliott Management Group and other bondholders to push for their own chapter 11 plan.

Their proposal would involve raising new money and using most of PG&E’s equity to pay off the utility firm’s debts.

The utility also faced intense criticism over pre-emptive power cuts in Northern California, where more than 1.5 million people were without power Thursday.

Delta Air Lines Inc.’s shares fell 1.5% after profit forecasts for the fourth quarter were less upbeat than expected.

Still, the airline’s third-quarter results beat earnings expectations.

Shares for Ra Pharmaceuticals Inc. surged 101.1% after Belgian biopharma company UCB agreed to acquire the Massachusetts-based biopharma company for $2.5 billion.

Kroger Co.’s stock retreated 2.8% after a Jefferies analyst called the grocer’s tech investment into Ocado a “misstep,” downgrading the company to hold from buy.

Shares of Bed Bath & Beyond Inc. rallied 21.6% after it announced that former Target Corp. head of merchandise Mark Tritton will take over as chief executive officer.

How did other assets trade?

The yield on the 10-year U.S. Treasury note climbed 6.4 basis points to 1.649%.

Gold futures fell after posting small gains on Wednesday.

December gold was down $11.90, or 0.8% to settle at $1,501.20 an ounce.

West Texas Intermediate crude for November delivery rose 96 cents, or 1.8%, to settle at $53.55 a barrel on the New York Mercantile Exchange.

In Asia overnight Thursday, trade was mixed, as Hong Kong’s Hang Seng Index added 0.1% to 25,707.93, the China CSI 300 rose 0.8% to reach 3,874.64, and Japan’s Nikkei 225 gained 0.5% to 21,551.98.

The Stoxx Europe 600, meanwhile, closed 0.7% higher to 382.76. ... 2019-10-10

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Post by thelivyjr » Thu Oct 10, 2019 1:40 p


"Oil ends at highest in over a week as traders focus on U.S.-China trade talks"

By Myra P. Saefong and William Watts

Published: Oct 10, 2019 3:04 p.m. ET

Oil prices climbed on Thursday, settling at their highest in more than a week, as traders attempted to make sense of conflicting news reports around U.S.-China trade talks and parsed OPEC’s monthly assessment of global supply and demand.

“It is clear that the markets believe the outcome of the U.S. China trade talks are the most important thing on the planet, and the outcome of these talks will either allow an explosion of global economic growth or a deep dark recession," said Phil Flynn, senior market analyst at Price Futures Group, in a daily report.

West Texas Intermediate crude for November delivery rose 96 cents, or 1.8%, to settle at $53.55 a barrel on the New York Mercantile Exchange — the highest front-month settlement since Oct. 1, according to Dow Jones Market Data.

The global benchmark, December Brent crude gained 78 cents, or 1.3%, to end at $59.10 a barrel on ICE Futures Europe, for the highest finish since Sept. 30.

“Reports are so confused and misleading at present that it is not possible to predict the outcome of the talks,” wrote analysts at Commerzbank.

“If they break down, prices can be expected to fall further because concerns about demand would then increase significantly again."

"If any partial agreement were reached, a relief rally would be on the cards.”

On Thursday, President Donald Trump said in a tweet that he plans to meet with Chinese Vice Premier Liu He on Friday.

That provided an added boost to oil prices.

That followed a report Wednesday from Bloomberg News that the White House could implement a previously agreed upon currency deal with China ahead of schedule, and suspend tariff hikes due to take effect next week.

The New York Times reported that President Donald Trump greenlighted issuing licenses to some U.S. companies to conduct business with Chinese telecom giant Huawei Technologies.

Earlier, the South China Morning Post had reported that talks earlier this week laying the groundwork for high-level talks due to begin Thursday had made little progress and that China’s main trade delegation would cut short its visit from two days to one.

Meanwhile, the Organization of the Petroleum Exporting Countries, in its monthly report, trimmed its forecast for 2019 world oil-demand growth but left its outlook for 2020 unchanged.

At the same time, it cut its outlook for non-OPEC supply growth in 2019 and 2020.

During a press briefing on the sidelines of an industry forum in London, OPEC Secretary General Mohammed Barkindo said OPEC and Russia and their allies haven’t ruled out deeper oil production cuts at their next meeting in December, according to a report from S&P Global Platts.

The current agreement between OPEC and its allies to cut 1.2 million barrels a day runs through March of 2020.

Over in Syria, the Turkish incursion does not directly affect oil production, Marshall Steeves, energy markets analyst at IHS Markit, told MarketWatch.

“However, there is likely some risk premium on fears of escalation, which seems unlikely to impact production at this point.”

Overall, oil “seems like a very range bound market with steady supplies and slowing demand growth but threats to production still a concern,” said Steeves.

Over in Ecuador, continued protests kept oil fields shut, forcing state-owned oil company Petroecuador to declare force majeure on its crude exports, according to news reports.

Ecuador exported around 315,000 barrels a day of crude oil in September 2019, and an average of 392,000 barrels a day for the year-to-date, according to analysts at ING, with nearly half of it going to the U.S. West Coast.

Lack of oil supplies from Ecuador could create some shortages at the West Coast in the short term, they said.

In other energy trading activity, November gasoline rose 2.3%, to $1.6233 a gallon, while November heating oil added nearly 0.1%, to $1.9208 a gallon.

November natural gas fell 0.7% to $2.218 per million British thermal units.

The EIA on Thursday reported that U.S. natural-gas supplies rose 98 billion cubic feet for the week ended Oct. 4, that met with expectations for a 97 billion cubic foot rise, on average, expected by analysts polled by S&P Global Platts. ... 2019-10-10

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Post by thelivyjr » Thu Oct 10, 2019 1:40 p


"10-year Treasury yield pushes above 1.6% after European bond-market selloff spills into U.S."

By Sunny Oh

Published: Oct 10, 2019 3:32 p.m. ET

U.S. Treasury yields climbed on Thursday, after minutes from the European Central Bank’s September meeting highlighted rifts within its policy-making committee, casting doubt on further easing and sparking a selloff in European government paper.

What are Treasurys doing?

The 10-year Treasury note yield climbed 6.4 basis points to 1.649%, while the 30-year bond yield was up 6.1 basis points to 2.146%.

The 2-year note rate rose 4.6 basis points to 1.520%.

The 10-year German government bond yield surged 8 basis points to negative 0.477%, around a three-week high.

What’s driving Treasurys?

Minutes of the ECB Governing Council’s last meeting in September showed that policy makers agreed on the need for further easing, but the decision to resume monthly asset purchases — the centerpiece of its quantitative easing program — proved highly contentious.

Investors also monitored developments on U.S.-China trade policy after President Donald Trump said Thursday he plans to meet Friday with Chinese Vice Premier Liu He.

His announcement boosted appetite for risky assets, such as stocks, at the expense of U.S. government paper.

The S&P 500 and the Dow Jones Industrial Average came off session highs but were on course to log gains on Thursday.

Conflicting reports over the likelihood of a deal whipsawed the bond market in Asian and European trading hours.

Some reports suggested lower-level talks earlier this week had made no headway on critical issues, and that the Chinese delegation’s visit was cut short.

Yet Bloomberg News reported that the White House could put in place a currency pact and suspend tariff increases that are set to take effect next week.

This comes as Liu meets with Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Thursday in Washington.

The U.S. consumer-price index for September was unchanged.

Economists polled by MarketWatch expect consumer prices to rise 0.1%.

In other data, weekly jobless claims fell in early October.

Earlier this week, a data release showed U.S. producer prices fell 0.3% in September, one of the earlier indications that price pressures may be waning.

Analysts said an auction for $16 billion of 30-year bonds drew sufficient demand, after broker-dealers in the morning had pushed yields higher to make room for the fresh influx of debt supply as part of the “concession” process.

What did market participants’ say?

“The inflation numbers are humdrum, it doesn’t materially change the outlook for the Fed and there’s nothing really there to change our view of the easing bias that the Fed has had,” said Steve Johnson, senior portfolio manager at SVB Asset Management, in an interview with MarketWatch.

“Christine Lagarde’s first task as new ECB president will be to urgently fix the rift."

"As long as it remains, we do not expect any imminent additional easing measures from the bank, even if the economic outlook gets worse,” wrote Carsten Brzeski, chief economist for ING Germany. ... 2019-10-10

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Post by thelivyjr » Thu Oct 10, 2019 1:40 p


"Low consumer inflation opens the door for Fed to cut interest rates further"

By Jeffry Bartash

Published: Oct 10, 2019 3:20 p.m. ET

The numbers:

Consumer inflation in the U.S. was held in check in September by falling prices of gasoline and used vehicles, giving the Federal Reserve further cause to cut interest rates if the economy gets any weaker.

The consumer-price index was flat in September, the government said Thursday, marking the smallest change since January.

Economists polled by MarketWatch had forecast a 0.1% advance.

The increase in the cost of living over the past 12 months was also unchanged at 1.7%.

The low rate of inflation, reflected in the CPI and other price barometers, may allow the Fed more leeway to trim rates if growth in the economy continues to slow.

Wall Street puts a high chance the central bank will reduce rates again at the end of the month.

Separately, the Bureau of Labor Statistics estimated that Social Security recipients would get a 1.6% cost-of-living increase in 2020.

COLA adjustments are based on the CPI report.

What happened:

The cost of gasoline and natural gas fell in September, accentuating a downtrend in energy prices.

The cost of food rose slightly, mostly for takeout and other meals prepared outside the home.

Another closely watched measure of prices that strips out food and energy costs inched up 0.1% in September, the smallest increase in four months.

The yearly increase in the so-called core rate was unchanged at 2.4%.

Prices rose for rent, medical care and airline fees, but they fell sharply for used vehicles and clothing.

Increases in the cost of used cars and apparel had driven up overall consumer prices during the summer.

After adjusting for inflation, hourly wages were flat last month.

They’ve increased a modest 1.2% in the past year.

The survey of consumer prices tends to run hotter than the Fed’s preferred inflation barometer known as the price index for personal-consumption expenditures.

The PCE is up just 1.4% over the past year — well below the Fed’s 2% annual inflation target.

Big picture:

Some parts of the economy are experiencing more inflation than others, but by and large price pressures are barely causing a ripple.

Slowing U.S. growth and sluggish global trade have also reduced the cost of many raw materials or partly finished goods.

With inflation largely under wraps, the Fed has said it would be prepared to cut interest rates again if the outlook for the U.S. economy worsens.

The central bank is worried the U.S. trade war with China will damage a record expansion now in its 11th year.

What they are saying?

“The trend in consumer inflation remains relatively soft with lower energy costs pulling down the CPI in September,” Nationwide senior economist Ben Ayers wrote to clients.

”The odds of a rate cut in October are moving up with domestic economic data turning softer in recent months.”

Market reaction:

The Dow Jones Industrial Average and S&P 500 rose in Thursday trades on hopes of easing U.S.-China trade tensions.

The 10-year Treasury yield jumped to 1.66%. ... 2019-10-10

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Post by thelivyjr » Thu Oct 10, 2019 1:40 p


"Fed’s Kaplan says he’s open-minded about further interest rate cuts"

By Greg Robb

Published: Oct 10, 2019 8:57 a.m. ET

Dallas Federal Reserve President Robert Kaplan said Thursday he won’t commit to a course of action for monetary policy ahead of the Fed’s late October policy meeting, preferring instead to carefully watch to see if the economy weakens or downside risks alleviate.

“I intend to avoid being rigid or predetermined from here, and plan to remain highly vigilant and keep and open mind as to whether further action on the federal funds rate is appropriate,” Kaplan said in an essay posted on his regional Fed bank’s website.

Kaplan said he shared the concern expressed by other Fed officials, revealed in the minutes to the Fed’s September policy meeting, that weakness in business spending could spread and ultimately impact consumer confidence and spending.

On the other hand, he said downside risks might alleviate some if trade tensions moderate somewhat.

And he said he was “mindful” of the argument of Fed hawks that interest rate cuts might create asset bubbles as investors seek higher yields.

Kaplan said he agreed with Fed critics that the monetary stance of Fed policy was too tight prior to the central bank reversing course with two rate cuts in July and September.

In an interview on Bloomberg Television, Kaplan said he didn’t support the push from some Fed officials for the central bank to publicly announce when it was finished easing monetary policy.

He added that he still didn’t think the Fed was on a path to cut rates to zero.

“I still believe” that this cutting will be limited and modest and not the start of a “full-fledged cutting cycle, he said.

U.S. stock-index futures drifted lower early Thursday on conflicting reports of the status of U.S.-China trade talks in Washington D.C.

On the volatility seen in the money-markets last month, Kaplan said he supports “more permanent steps” to ensure the funding market functions, an apparent reference to a standing repo facility that many have called for to provide more liquidity.

The Dow Jones Industrial Average was up 181 points on Wednesday. ... 2019-10-10

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