MARKETWATCH
"U.S. September consumer credit grows at slowest rate in 15 months"
By Greg Robb
Published: Nov 7, 2019 5:38 p.m. ET
The numbers:
U.S. consumer borrowing grew in September at the slowest rate in 15 months, according to Federal Reserve data released Thursday.
Total consumer credit increased $9.5 billion, down from $17.8 billion in August.
Economists has been expecting a $15 billion gain, according to Econoday.
The September gain was well below the monthly average growth for the first eight months of the year of around $16 billion.
It translates into an annual growth rate of 2.8%, the slowest since June 2018.
What happened:
Revolving credit, like credit cards, fell for the second straight month in September.
That’s the first time this has happened since the summer of 2012.
Borrowing fell 1.2% after falling 2.5% in August.
It is the third decline in revolving credit in the past four months.
Non-revolving credit, typically auto and student loans, rose 4.2% in September, the slowest rate in four months.
The data does not include mortgage loans.
What are they saying:
“The credit card spending trend appears to show that while consumers remain willing and able to spend, they are doing so only cautiously and are still reluctant to take on substantial debt,” said T.J. Connelly, head of research at Contingent Macro Research.
Big picture:
With business investment sagging, all eyes are on the consumer to keep the expansion on track.
Fed Chairman Jerome Powell told reporters last week that the Fed hasn’t seen the weakness from business spending “getting into the consumer side of the economy."
But many economists worry about increasing layoffs in coming months.
For now, low unemployment and solid wage growth has consumers on a solid footing.
Banks have been tightening standards on credit cards all year, according to the Fed’s latest senior loan officer survey, despite delinquencies being near historic lows.
Market reaction:
The S&P 500 index and the Dow Jones Industrial Average closed at fresh records Thursday as investors welcomed apparent easing of trade tensions between the U.S. and China.
https://www.marketwatch.com/story/septe ... latestnews
THE ECONOMY
Re: THE ECONOMY
MARKETWATCH
"U.S. jobless claims fall to one-month low of 211,000 — labor market stays strong"
By Jeffry Bartash
Published: Nov 7, 2019 8:41 a.m. ET
The numbers:
The number of people who applied for unemployments benefits in early November fell to the lowest level in a month and clung near a half-century low, reflecting the resilience of the strongest labor market in decades.
Initial jobless claims declined by 8,000 to 211,000 in the seven days ended Nov. 2, the government said Thursday.
Economists polled by MarketWatch had forecast new claims to total a seasonally adjusted 215,000.
Jobless claims are the best measure to track layoffs.
They usually start to spike right before a recession and decline to low levels during economic expansions.
What happened:
The actual or unadjusted number of jobless claims fell the most in California, Georgia and Virginia.
Claims had risen in California last month after raging wildfires and major power outages kept many people from work.
New claims rose the most in Illinois and Pennsylvania.
The government adjusts jobless claims to account for the periodic sharp swing in seasonal employment patterns.
These gyrations are most pronounced in the summer and around big holidays such as Easter, Thanksgiving and Christmas.
The monthly average of new claims, meanwhile, rose a scant 250 to 215,250.
The four-week average gives a more stable view of the labor market than the more volatile weekly number.
The number of people already collecting unemployment benefits, known as continuing claims, fell by 3,000 to 1.69 million.
These claims are near the lowest level since the early 1970s.
Big picture:
The U.S. economy slowed during the spring and summer, but it’s hardly made any dent in the labor market.
The pace of layoffs and the unemployment rate remain near a 50-year low, giving Americans the confidence to keep spending at healthy levels.
Steady consumer spending, in turn, has allowed businesses to keep up production and largely avoid the sort of broad-based layoffs that could send the economy into a recessionary spiral.
Market reaction:
The Dow Jones Industrial Average and S&P 500 were set to open higher in Thursday trades on reports of a further de-escalation in U.S.-China trade tensions.
The 10-year Treasury yield rose to 1.88%.
https://www.marketwatch.com/story/joble ... 2019-11-07
"U.S. jobless claims fall to one-month low of 211,000 — labor market stays strong"
By Jeffry Bartash
Published: Nov 7, 2019 8:41 a.m. ET
The numbers:
The number of people who applied for unemployments benefits in early November fell to the lowest level in a month and clung near a half-century low, reflecting the resilience of the strongest labor market in decades.
Initial jobless claims declined by 8,000 to 211,000 in the seven days ended Nov. 2, the government said Thursday.
Economists polled by MarketWatch had forecast new claims to total a seasonally adjusted 215,000.
Jobless claims are the best measure to track layoffs.
They usually start to spike right before a recession and decline to low levels during economic expansions.
What happened:
The actual or unadjusted number of jobless claims fell the most in California, Georgia and Virginia.
Claims had risen in California last month after raging wildfires and major power outages kept many people from work.
New claims rose the most in Illinois and Pennsylvania.
The government adjusts jobless claims to account for the periodic sharp swing in seasonal employment patterns.
These gyrations are most pronounced in the summer and around big holidays such as Easter, Thanksgiving and Christmas.
The monthly average of new claims, meanwhile, rose a scant 250 to 215,250.
The four-week average gives a more stable view of the labor market than the more volatile weekly number.
The number of people already collecting unemployment benefits, known as continuing claims, fell by 3,000 to 1.69 million.
These claims are near the lowest level since the early 1970s.
Big picture:
The U.S. economy slowed during the spring and summer, but it’s hardly made any dent in the labor market.
The pace of layoffs and the unemployment rate remain near a 50-year low, giving Americans the confidence to keep spending at healthy levels.
Steady consumer spending, in turn, has allowed businesses to keep up production and largely avoid the sort of broad-based layoffs that could send the economy into a recessionary spiral.
Market reaction:
The Dow Jones Industrial Average and S&P 500 were set to open higher in Thursday trades on reports of a further de-escalation in U.S.-China trade tensions.
The 10-year Treasury yield rose to 1.88%.
https://www.marketwatch.com/story/joble ... 2019-11-07
Re: THE ECONOMY
MARKETWATCH
"Fed can no longer ignore the economic ‘shocks’ of climate change, Brainard says"
By Rachel Koning Beals
Published: Nov 8, 2019 3:19 p.m. ET
As historic wildfires sweep through parts of Sonoma wine country, a first-of-its-kind Federal Reserve summit hosted by the nearby San Francisco branch may reveal a central-bank shift in focus on climate change and its potential to deliver economic “shocks.”
Many of the world’s top central banks want to move the global financial system away from a reliance on industries — including fossil-fuel giants — that scientists largely have cited as posing increased risk for contributing to extreme changes in weather, large fires, rising sea levels and flooding.
Thus far, the Fed has been the laggard among is central-bank peers in this regard.
However, a rapidly changing climate may present just the kind of “shock” to the economic system that she and colleagues believe can no longer be ignored, Fed Gov. Lael Brainard said in prepared remarks to the summit.
“Because there is considerable uncertainty about the persistence, breadth, and magnitude of climate-related shocks to the economy, it could be challenging to assess what adjustments to monetary policy are likely to be most effective at keeping the economy operating at potential with maximum employment and price stability,” Brainard wrote in prepared remarks.
“Increasingly, it will be important for the Federal Reserve to take into account the effects of climate change and associated policies in setting monetary policy to achieve our objectives of maximum employment and price stability,” she said.
Not only are there short-term natural disasters like the wild fires in California, but “to the extent that climate change and the associated policy responses affect productivity and long-run economic growth, there may be implications for the long-run neutral level of the real interest rate, which is a key consideration in monetary policy,” Brainard said.
In one paper presented in San Francisco, the authors said climate change could subtract 7% from real world per-capita gross domestic product by 2100.
A separate essay weighed the effectiveness of taxing carbon against subsidies that boosted wind and solar power.
Yet another paper took the position that trade agreements should be more transparent on their effect in boosting greenhouse-gas emissions.
When it comes to climate change, “we’re actually just looking at the data,” Mary Daly, the president of the San Francisco Fed, told reporters ahead of the summit, according to the Wall Street Journal.
With climate change, “it becomes prudent for us to consider what the fallout on the economy is, and on the payment system and on the supervision and regulation [of banks],” Daly said.
“So I don’t see that as anything outside of our mission."
"In fact, I think it’s squarely in our mission and important for us to do that.”
Others have weighed in.
“There has been an increased willingness to engage on climate-change issues,” New York Fed President John Williams agreed in remarks earlier this month.
“As the Fed, we are careful not to tell Congress what to do, but we can inform the debate.”
Increased attention on the risks has made its way to the top of the central bank.
In a letter to Congress earlier this year, Fed Chairman Jerome Powell wrote that “over the short term, these events have the potential to inflict serious damage on the lives of individuals and families, devastate local economies (including financial institutions), and even temporarily affect national economic output and employment.”
He added, “As such, these events may affect economic conditions, which we take into account in our assessment of the outlook for the economy.”
For its part, the Trump administration has been rolling back regulations that have direct impacts on energy sectors, including undoing Obama-era limits on coal.
And earlier this month, the White House began the official steps to withdraw the U.S. from the largely globally embraced Paris climate accord, which the president has said isn’t uniformly enforced.
The time lapse between U.S. seriousness toward climate risks and earlier attention from others in power haven’t gone unnoticed.
Bank of England Gov. Mark Carney said in an October speech in Tokyo that central banks will have to consider the physical risks of climate change when weighing monetary policy.
That ranges from the impact on mortgages from flooding to severe weather’s toll on the pricing of government bonds.
Patrick Honohan, nonresident senior fellow at the Peterson Institute for International Economics, former governor of the Central Bank of Ireland and a member of the governing council of the European Central Bank from September 2009 to November 2015, has written recently to soothe central bankers from the notion that wading into climate-change issues will sully their political independence in setting monetary policy, saying central banks have been behind the curve of society’s response to these issues.
“Many central bankers will balk at the idea, fearing a damaging loss of independence and a dangerous distraction from their core competencies."
"These are clearly valid and important concerns,” he said.
“But the secondary mandates, whether explicit or implicit, of central banks arguably warrant attention to large systemic issues like climate change and inequality, to the extent that these can be significantly influenced without detracting from the primary goals of monetary policy.”
https://www.marketwatch.com/story/fed-c ... 2019-11-08
"Fed can no longer ignore the economic ‘shocks’ of climate change, Brainard says"
By Rachel Koning Beals
Published: Nov 8, 2019 3:19 p.m. ET
As historic wildfires sweep through parts of Sonoma wine country, a first-of-its-kind Federal Reserve summit hosted by the nearby San Francisco branch may reveal a central-bank shift in focus on climate change and its potential to deliver economic “shocks.”
Many of the world’s top central banks want to move the global financial system away from a reliance on industries — including fossil-fuel giants — that scientists largely have cited as posing increased risk for contributing to extreme changes in weather, large fires, rising sea levels and flooding.
Thus far, the Fed has been the laggard among is central-bank peers in this regard.
However, a rapidly changing climate may present just the kind of “shock” to the economic system that she and colleagues believe can no longer be ignored, Fed Gov. Lael Brainard said in prepared remarks to the summit.
“Because there is considerable uncertainty about the persistence, breadth, and magnitude of climate-related shocks to the economy, it could be challenging to assess what adjustments to monetary policy are likely to be most effective at keeping the economy operating at potential with maximum employment and price stability,” Brainard wrote in prepared remarks.
“Increasingly, it will be important for the Federal Reserve to take into account the effects of climate change and associated policies in setting monetary policy to achieve our objectives of maximum employment and price stability,” she said.
Not only are there short-term natural disasters like the wild fires in California, but “to the extent that climate change and the associated policy responses affect productivity and long-run economic growth, there may be implications for the long-run neutral level of the real interest rate, which is a key consideration in monetary policy,” Brainard said.
In one paper presented in San Francisco, the authors said climate change could subtract 7% from real world per-capita gross domestic product by 2100.
A separate essay weighed the effectiveness of taxing carbon against subsidies that boosted wind and solar power.
Yet another paper took the position that trade agreements should be more transparent on their effect in boosting greenhouse-gas emissions.
When it comes to climate change, “we’re actually just looking at the data,” Mary Daly, the president of the San Francisco Fed, told reporters ahead of the summit, according to the Wall Street Journal.
With climate change, “it becomes prudent for us to consider what the fallout on the economy is, and on the payment system and on the supervision and regulation [of banks],” Daly said.
“So I don’t see that as anything outside of our mission."
"In fact, I think it’s squarely in our mission and important for us to do that.”
Others have weighed in.
“There has been an increased willingness to engage on climate-change issues,” New York Fed President John Williams agreed in remarks earlier this month.
“As the Fed, we are careful not to tell Congress what to do, but we can inform the debate.”
Increased attention on the risks has made its way to the top of the central bank.
In a letter to Congress earlier this year, Fed Chairman Jerome Powell wrote that “over the short term, these events have the potential to inflict serious damage on the lives of individuals and families, devastate local economies (including financial institutions), and even temporarily affect national economic output and employment.”
He added, “As such, these events may affect economic conditions, which we take into account in our assessment of the outlook for the economy.”
For its part, the Trump administration has been rolling back regulations that have direct impacts on energy sectors, including undoing Obama-era limits on coal.
And earlier this month, the White House began the official steps to withdraw the U.S. from the largely globally embraced Paris climate accord, which the president has said isn’t uniformly enforced.
The time lapse between U.S. seriousness toward climate risks and earlier attention from others in power haven’t gone unnoticed.
Bank of England Gov. Mark Carney said in an October speech in Tokyo that central banks will have to consider the physical risks of climate change when weighing monetary policy.
That ranges from the impact on mortgages from flooding to severe weather’s toll on the pricing of government bonds.
Patrick Honohan, nonresident senior fellow at the Peterson Institute for International Economics, former governor of the Central Bank of Ireland and a member of the governing council of the European Central Bank from September 2009 to November 2015, has written recently to soothe central bankers from the notion that wading into climate-change issues will sully their political independence in setting monetary policy, saying central banks have been behind the curve of society’s response to these issues.
“Many central bankers will balk at the idea, fearing a damaging loss of independence and a dangerous distraction from their core competencies."
"These are clearly valid and important concerns,” he said.
“But the secondary mandates, whether explicit or implicit, of central banks arguably warrant attention to large systemic issues like climate change and inequality, to the extent that these can be significantly influenced without detracting from the primary goals of monetary policy.”
https://www.marketwatch.com/story/fed-c ... 2019-11-08
Re: THE ECONOMY
MARKETWATCH
"Fed’s Bostic says he didn’t support last month’s interest-rate cut"
By Greg Robb
Published: Nov 8, 2019 5:31 p.m. ET
Atlanta Fed President Raphael Bostic said Friday he wasn’t in favor of the central bank’s decision to cut interest rates by a quarter percentage point at its meeting in late October.
“We had already moved twice already and it was my view was we should just let that go and wait and see how that plays out,” Bostic said, in an interview with Bloomberg Television.
“My business contacts have been consistent through this entire year — the consumer has been solid, their revenues have been solid, their profits have been pretty stable,” Bostic said.
“And what they’ve told me is that they’re expecting that to continue on into 2020,” he said.
Bostic isn’t a voting member of the Fed’s interest-rate setting committee this year.
He will vote again in 2021 but said he didn’t think interest rates were too low or that there was a danger the low level of rates would spark an overheated economy.
Rather, he said his concern was that the Fed wouldn’t have that much ammunition left to fight any severe downturn.
The Fed’s benchmark rate is now in a range of 1.5%-1.75%.
“That’s not a lot of space,” he said.
In past downturns, the Fed has been able to cut interest rates by about 5 percentage points to spark an economic recovery.
There were two formal votes dissenting against monetary policy easing at the October meeting — by Kansas City Fed President Esther George and Boston Fed President Eric Rosengren.
Bostic said the economy was “solid” and the Fed should hold steady and review the data before making any more moves.
In the interview on Fox Business Network, Bostic said he expects GDP to slow to somewhere in the 1.5%-1.75% annual rate in the fourth quarter after a 1.9% rate in the third quarter.
That would translate into a 2.1% growth rate for the year.
“Our models are that the economy is going to be pretty close to where we are for 2019 and 2020, for the next six to 12 months,” he said.
“I think we’re settling into a phase where we’re going to be, in our long-run, steady state level on GDP growth.”
The yield on the U.S. 10-year Treasury note has risen in five of the past six trading days to the highest level since July.
It was up to 1.93% in Friday afternoon trading.
Stocks closed at record highs.
https://www.marketwatch.com/story/feds- ... 2019-11-08
"Fed’s Bostic says he didn’t support last month’s interest-rate cut"
By Greg Robb
Published: Nov 8, 2019 5:31 p.m. ET
Atlanta Fed President Raphael Bostic said Friday he wasn’t in favor of the central bank’s decision to cut interest rates by a quarter percentage point at its meeting in late October.
“We had already moved twice already and it was my view was we should just let that go and wait and see how that plays out,” Bostic said, in an interview with Bloomberg Television.
“My business contacts have been consistent through this entire year — the consumer has been solid, their revenues have been solid, their profits have been pretty stable,” Bostic said.
“And what they’ve told me is that they’re expecting that to continue on into 2020,” he said.
Bostic isn’t a voting member of the Fed’s interest-rate setting committee this year.
He will vote again in 2021 but said he didn’t think interest rates were too low or that there was a danger the low level of rates would spark an overheated economy.
Rather, he said his concern was that the Fed wouldn’t have that much ammunition left to fight any severe downturn.
The Fed’s benchmark rate is now in a range of 1.5%-1.75%.
“That’s not a lot of space,” he said.
In past downturns, the Fed has been able to cut interest rates by about 5 percentage points to spark an economic recovery.
There were two formal votes dissenting against monetary policy easing at the October meeting — by Kansas City Fed President Esther George and Boston Fed President Eric Rosengren.
Bostic said the economy was “solid” and the Fed should hold steady and review the data before making any more moves.
In the interview on Fox Business Network, Bostic said he expects GDP to slow to somewhere in the 1.5%-1.75% annual rate in the fourth quarter after a 1.9% rate in the third quarter.
That would translate into a 2.1% growth rate for the year.
“Our models are that the economy is going to be pretty close to where we are for 2019 and 2020, for the next six to 12 months,” he said.
“I think we’re settling into a phase where we’re going to be, in our long-run, steady state level on GDP growth.”
The yield on the U.S. 10-year Treasury note has risen in five of the past six trading days to the highest level since July.
It was up to 1.93% in Friday afternoon trading.
Stocks closed at record highs.
https://www.marketwatch.com/story/feds- ... 2019-11-08
Re: THE ECONOMY
MARKETWATCH
"U.S. consumer sentiment improves a bit in November"
By Greg Robb
Published: Nov 8, 2019 5:33 p.m. ET
The numbers:
The U.S. consumer sentiment survey rose slightly to 95.7 this month from 95.5 in October, the University of Michigan said Friday in a preliminary estimate.
Economists surveyed by MarketWatch had forecast a reading of 95.
What happened:
According to the University of Michigan, a gauge of consumers’ views on current conditions declined to 110.9 in November from 113.2 in October, while a barometer of their expectations rose to 85.9 from 84.2.
Big picture:
Economists follow readings on confidence to look for clues about consumer spending, the backbone of the economy.
Consumer spending is even more important now that business investment has slumped.
Sentiment has moved higher after a sharp drop in August.
Economists say low interest rates have bolstered the outlook for households.
A reading of inflation expectations, the 5-to-10 year measure rose a tenth to 2.4%, at the lower end of recent range but stable.
The index is closely watched by the Federal Reserve, which views declining consumer assumptions of falling inflation as a signal of a weak economic outlook.
What the UMich researchers said:
“Although consumers have become somewhat more cautious spenders, they see no reason to engage in the type of retrenchment that causes recessions,” said Richard Curtin, the surveys of consumers chief economist.
What outside economists said:
“The mood of the consumer remains little changed."
"Given their relative optimism, that’s not a bad thing, particularly against the range of uncertainties that the economy has been facing in recent months,” said JIm Baird, chief investment officer for Plante Moran Financial Advisors.
Market reaction:
Stocks closed at record highs on Friday.
https://www.marketwatch.com/story/consu ... 2019-11-08
"U.S. consumer sentiment improves a bit in November"
By Greg Robb
Published: Nov 8, 2019 5:33 p.m. ET
The numbers:
The U.S. consumer sentiment survey rose slightly to 95.7 this month from 95.5 in October, the University of Michigan said Friday in a preliminary estimate.
Economists surveyed by MarketWatch had forecast a reading of 95.
What happened:
According to the University of Michigan, a gauge of consumers’ views on current conditions declined to 110.9 in November from 113.2 in October, while a barometer of their expectations rose to 85.9 from 84.2.
Big picture:
Economists follow readings on confidence to look for clues about consumer spending, the backbone of the economy.
Consumer spending is even more important now that business investment has slumped.
Sentiment has moved higher after a sharp drop in August.
Economists say low interest rates have bolstered the outlook for households.
A reading of inflation expectations, the 5-to-10 year measure rose a tenth to 2.4%, at the lower end of recent range but stable.
The index is closely watched by the Federal Reserve, which views declining consumer assumptions of falling inflation as a signal of a weak economic outlook.
What the UMich researchers said:
“Although consumers have become somewhat more cautious spenders, they see no reason to engage in the type of retrenchment that causes recessions,” said Richard Curtin, the surveys of consumers chief economist.
What outside economists said:
“The mood of the consumer remains little changed."
"Given their relative optimism, that’s not a bad thing, particularly against the range of uncertainties that the economy has been facing in recent months,” said JIm Baird, chief investment officer for Plante Moran Financial Advisors.
Market reaction:
Stocks closed at record highs on Friday.
https://www.marketwatch.com/story/consu ... 2019-11-08
Re: THE ECONOMY
MARKETWATCH
"Boston Fed's Rosengren says capital buffers on banks should be increasing"
By Steve Goldstein
Published: Nov 11, 2019 8:15 a.m. ET
Boston Fed President Eric Rosengren told a conference in Oslo that capital buffers should be rising for big banks, not just in the U.S. but also Japan and Europe.
"I am not sure that recent developments and proposals in bank regulation properly reflect the risks we are likely to face in a low interest rate environment that challenges bank profitability and provides less by way of monetary policy buffers."
"Specifically, capital buffers should be rising now so that there is more room for them to decline if the economy falters."
"While this is true for the United States, it may be even more true in Japan and Europe," he said.
Only the Fed board of governors get to vote on capital buffers, so Rosengren doesn't have a say on U.S. buffers.
The Fed in March voted to keep the countercyclical capital buffer at zero.
https://www.marketwatch.com/story/bosto ... 2019-11-11
"Boston Fed's Rosengren says capital buffers on banks should be increasing"
By Steve Goldstein
Published: Nov 11, 2019 8:15 a.m. ET
Boston Fed President Eric Rosengren told a conference in Oslo that capital buffers should be rising for big banks, not just in the U.S. but also Japan and Europe.
"I am not sure that recent developments and proposals in bank regulation properly reflect the risks we are likely to face in a low interest rate environment that challenges bank profitability and provides less by way of monetary policy buffers."
"Specifically, capital buffers should be rising now so that there is more room for them to decline if the economy falters."
"While this is true for the United States, it may be even more true in Japan and Europe," he said.
Only the Fed board of governors get to vote on capital buffers, so Rosengren doesn't have a say on U.S. buffers.
The Fed in March voted to keep the countercyclical capital buffer at zero.
https://www.marketwatch.com/story/bosto ... 2019-11-11
Re: THE ECONOMY
MARKETWATCH
"Trump calls U.S.-China deal ‘close’ in speech where he blasts Fed and touts economic successes"
By Robert Schroeder
Published: Nov 12, 2019 2:08 p.m. ET
President Donald Trump on Tuesday said a U.S.-China trade deal “could happen soon,” describing a phase-one agreement as “close” in a speech to the Economic Club of New York.
In the closely watched speech, Trump called Beijing “dying to make a deal” with the U.S., but gave scant details on phasing out tariffs or setting a meeting to sign any deal with Chinese President Xi Jinping.
Trump also took aim at the Federal Reserve and touted U.S. job creation in the midday speech, saying that his administration had “exceeded expectations” on the U.S. economy by creating nearly 7 million new jobs.
The number is closer to 6.5 million since the beginning of the Trump administration, according to the government.
One day ahead of a Capitol Hill testimony by Fed Chairman Jerome Powell, Trump repeated his charge that the central bank has cut interest rates too slowly.
Citing stock-market records, Trump claimed, “if we had a Fed that worked with us, we could have added another 25% to those numbers.”
Equities and other assets have hung on statements from Trump and China about the possibility of a deal, with the president last week disputing Beijing’s assertion that the U.S. and China had agreed to roll back tariffs as part of an interim trade pact.
U.S. stock-indexes all held on to modest gains in Tuesday action as Trump spoke.
The U.S. and China have placed tariffs on billions of dollars’ worth of each others’ goods in a trade fight that has roiled global markets.
The next round of U.S. levies on Chinese products is scheduled to go into effect on Dec.15., and covers $156 billion of goods including toys and computers.
Trump warned Tuesday, “if we don’t make a deal, we’re going to substantially raise the tariffs.”
The tariff fight has come as officials from the two sides have been negotiating the so-called phase one, or partial, trade agreement.
Under that phase, the U.S. aims to have China buy more American agricultural products; beef up intellectual property protections for foreign companies in China; and open China’s financial-services market.
https://www.marketwatch.com/story/trump ... 2019-11-12
"Trump calls U.S.-China deal ‘close’ in speech where he blasts Fed and touts economic successes"
By Robert Schroeder
Published: Nov 12, 2019 2:08 p.m. ET
President Donald Trump on Tuesday said a U.S.-China trade deal “could happen soon,” describing a phase-one agreement as “close” in a speech to the Economic Club of New York.
In the closely watched speech, Trump called Beijing “dying to make a deal” with the U.S., but gave scant details on phasing out tariffs or setting a meeting to sign any deal with Chinese President Xi Jinping.
Trump also took aim at the Federal Reserve and touted U.S. job creation in the midday speech, saying that his administration had “exceeded expectations” on the U.S. economy by creating nearly 7 million new jobs.
The number is closer to 6.5 million since the beginning of the Trump administration, according to the government.
One day ahead of a Capitol Hill testimony by Fed Chairman Jerome Powell, Trump repeated his charge that the central bank has cut interest rates too slowly.
Citing stock-market records, Trump claimed, “if we had a Fed that worked with us, we could have added another 25% to those numbers.”
Equities and other assets have hung on statements from Trump and China about the possibility of a deal, with the president last week disputing Beijing’s assertion that the U.S. and China had agreed to roll back tariffs as part of an interim trade pact.
U.S. stock-indexes all held on to modest gains in Tuesday action as Trump spoke.
The U.S. and China have placed tariffs on billions of dollars’ worth of each others’ goods in a trade fight that has roiled global markets.
The next round of U.S. levies on Chinese products is scheduled to go into effect on Dec.15., and covers $156 billion of goods including toys and computers.
Trump warned Tuesday, “if we don’t make a deal, we’re going to substantially raise the tariffs.”
The tariff fight has come as officials from the two sides have been negotiating the so-called phase one, or partial, trade agreement.
Under that phase, the U.S. aims to have China buy more American agricultural products; beef up intellectual property protections for foreign companies in China; and open China’s financial-services market.
https://www.marketwatch.com/story/trump ... 2019-11-12
Re: THE ECONOMY
MARKETWATCH
"Consumer prices rise at fastest pace in 7 months on higher cost of gas, CPI shows"
By Jeffry Bartash
Published: Nov 13, 2019 10:24 a.m. ET
The numbers:
Americans paid higher prices for gasoline, used cars, medical treatment and recreation in October, but inflation more broadly remained low and fairly stable.
The consumer price index jumped 0.4% in October, with energy accounting for more than half the increase, the government said Wednesday.
Economists polled by MarketWatch had forecast a 0.3% advance.
The increase in the cost of living over the past 12 months edged up to 1.8% from 1.7%, but it’s still well below last year’s peak of nearly 3%.
Another closely watched measure of inflation that strips out food and energy advanced 0.2% last month.
The yearly increase in the so-called core rate slipped to 2.3% from 2.4%.
What happened:
Gas prices surged 3.7% in October, but Americans are still paying less to fill up now than they did a year ago.
The cost of gas is about 7% lower.
Prices for medical care rose 1% in October, marking the biggest increase in more than three years.
The cost of health care has been on the rise again after a prolong period of stable prices.
Some analysts worry it could feed into higher inflation, but others expect medical prices to taper off again.
The cost of recreation — ticket prices, cable TV and the like — also posted an unusually large increase last month.
The 0.7% acceleration was the biggest gain since 1996.
Food prices rose in October, but the cost of dining out is rising much faster than eating in.
The cost of “food at home” — groceries — has climbed just 1% in the past year.
Prices for “food away from home” have shot up 3.3%, perhaps reflecting the higher cost of labor.
Many states have increased minimum wages.
Prices fell for clothes, household furnishings, new cars and trucks and airline fares.
The increase in rent was just 0.1%, the smallest since 2011.
The cost of rent and housing have eased somewhat this year.
After adjusting for inflation, hourly wages fell 0.2%.
They have risen a solid 1.2% in the past year, however.
Big picture:
Inflation has settled down to around 2% a year and isn’t budging much despite higher wages, the tightest labor market in 50 years and tariff-related price increases.
Many economists expect inflation to creep higher and perhaps top 2% soon, but not go much higher than that.
The low rate of inflation has given the Federal Reserve the leeway to cut interest rates to extend an economic expansion now in its 11th year.
The central bank would like prices to rise a bit higher for the good of the economy, but low inflation allows Americans to stretch their dollars further and buy more goods and services.
Strong consumer spending boosted gross domestic product in the spring and summer and is likely to remain robust during the holiday season.
What they are saying?
“Amid little sustained upward pressure on prices, despite tariffs and a tighter labor market, the Fed will be in zero rush to unwind recent rate cuts,” said senior economist Sal Guatieri of BMO Capital Markets.
Market reaction:
The Dow Jones Industrial Average and S&P 500 fell slightly in Wednesday trades, but remained near record highs.
The 10-year Treasury yield was little changed at 1.88%.
https://www.marketwatch.com/story/consu ... 2019-11-13
"Consumer prices rise at fastest pace in 7 months on higher cost of gas, CPI shows"
By Jeffry Bartash
Published: Nov 13, 2019 10:24 a.m. ET
The numbers:
Americans paid higher prices for gasoline, used cars, medical treatment and recreation in October, but inflation more broadly remained low and fairly stable.
The consumer price index jumped 0.4% in October, with energy accounting for more than half the increase, the government said Wednesday.
Economists polled by MarketWatch had forecast a 0.3% advance.
The increase in the cost of living over the past 12 months edged up to 1.8% from 1.7%, but it’s still well below last year’s peak of nearly 3%.
Another closely watched measure of inflation that strips out food and energy advanced 0.2% last month.
The yearly increase in the so-called core rate slipped to 2.3% from 2.4%.
What happened:
Gas prices surged 3.7% in October, but Americans are still paying less to fill up now than they did a year ago.
The cost of gas is about 7% lower.
Prices for medical care rose 1% in October, marking the biggest increase in more than three years.
The cost of health care has been on the rise again after a prolong period of stable prices.
Some analysts worry it could feed into higher inflation, but others expect medical prices to taper off again.
The cost of recreation — ticket prices, cable TV and the like — also posted an unusually large increase last month.
The 0.7% acceleration was the biggest gain since 1996.
Food prices rose in October, but the cost of dining out is rising much faster than eating in.
The cost of “food at home” — groceries — has climbed just 1% in the past year.
Prices for “food away from home” have shot up 3.3%, perhaps reflecting the higher cost of labor.
Many states have increased minimum wages.
Prices fell for clothes, household furnishings, new cars and trucks and airline fares.
The increase in rent was just 0.1%, the smallest since 2011.
The cost of rent and housing have eased somewhat this year.
After adjusting for inflation, hourly wages fell 0.2%.
They have risen a solid 1.2% in the past year, however.
Big picture:
Inflation has settled down to around 2% a year and isn’t budging much despite higher wages, the tightest labor market in 50 years and tariff-related price increases.
Many economists expect inflation to creep higher and perhaps top 2% soon, but not go much higher than that.
The low rate of inflation has given the Federal Reserve the leeway to cut interest rates to extend an economic expansion now in its 11th year.
The central bank would like prices to rise a bit higher for the good of the economy, but low inflation allows Americans to stretch their dollars further and buy more goods and services.
Strong consumer spending boosted gross domestic product in the spring and summer and is likely to remain robust during the holiday season.
What they are saying?
“Amid little sustained upward pressure on prices, despite tariffs and a tighter labor market, the Fed will be in zero rush to unwind recent rate cuts,” said senior economist Sal Guatieri of BMO Capital Markets.
Market reaction:
The Dow Jones Industrial Average and S&P 500 fell slightly in Wednesday trades, but remained near record highs.
The 10-year Treasury yield was little changed at 1.88%.
https://www.marketwatch.com/story/consu ... 2019-11-13
Re: THE ECONOMY
MARKETWATCH
"U.S. budget deficit jumps 34% in October, gap set to top $1 trillion in 2020"
By Jeffry Bartash
Published: Nov 13, 2019 2:35 p.m. ET
The numbers:
The federal government’s budget deficit in October rose 34% from a year earlier to $134.5 billion, putting the U.S. on course to top the $1 trillion mark in fiscal 2020 for the first time in eight years.
What happened:
Government spending increased 8% in October to $380 billion compared to a year earlier.
Federal outlays rose for defense, education, health and Social Security.
The amount of tax receipts the government took in, meanwhile, dipped 3% to $246 billion.
Excise taxes fell sharply and income and corporate taxes also declined.
The government collected $7.8 billion in customs duties in October, up from $5.6 billion in the same month a year ago.
These duties surged after the Trump administration imposed stiff tariffs on Chinese goods starting in mid-2018.
Big picture:
U.S. budget deficits began increasing again in 2016 and have risen four straight years.
A combination of large tax cuts in 2017 and higher federal spending is expected to push the deficit above $1 trillion in the current fiscal year that ends next September or nearly 5% of gross domestic product.
It’ll be the first time the deficit has topped the $1 trillion mark since 2012.
Deficits topped $1 trillion for four straight years from 2009 to 2012 in the aftermath of the Great Recession.
Rising deficits typically lead to higher interest rates over time, but that hasn’t been the case for a long time.
The 10-year Treasury yield was little changed at 1.88%, an extremely low rate historically.
https://www.marketwatch.com/story/us-bu ... 2019-11-13
"U.S. budget deficit jumps 34% in October, gap set to top $1 trillion in 2020"
By Jeffry Bartash
Published: Nov 13, 2019 2:35 p.m. ET
The numbers:
The federal government’s budget deficit in October rose 34% from a year earlier to $134.5 billion, putting the U.S. on course to top the $1 trillion mark in fiscal 2020 for the first time in eight years.
What happened:
Government spending increased 8% in October to $380 billion compared to a year earlier.
Federal outlays rose for defense, education, health and Social Security.
The amount of tax receipts the government took in, meanwhile, dipped 3% to $246 billion.
Excise taxes fell sharply and income and corporate taxes also declined.
The government collected $7.8 billion in customs duties in October, up from $5.6 billion in the same month a year ago.
These duties surged after the Trump administration imposed stiff tariffs on Chinese goods starting in mid-2018.
Big picture:
U.S. budget deficits began increasing again in 2016 and have risen four straight years.
A combination of large tax cuts in 2017 and higher federal spending is expected to push the deficit above $1 trillion in the current fiscal year that ends next September or nearly 5% of gross domestic product.
It’ll be the first time the deficit has topped the $1 trillion mark since 2012.
Deficits topped $1 trillion for four straight years from 2009 to 2012 in the aftermath of the Great Recession.
Rising deficits typically lead to higher interest rates over time, but that hasn’t been the case for a long time.
The 10-year Treasury yield was little changed at 1.88%, an extremely low rate historically.
https://www.marketwatch.com/story/us-bu ... 2019-11-13
Re: THE ECONOMY
MARKETWATCH - The Fed
"Fed’s Powell says interest rates will be on hold absent a material deterioration in economy"
By Greg Robb
Published: Nov 13, 2019 2:38 p.m. ET
Federal Reserve Chairman Jerome Powell on Wednesday told Congress that interest rates are on hold absent a material deterioration of the economy.
“We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market, and inflation near our symmetric 2% objective,” Powell said, in remarks prepared for delivery to the Joint Economic Committee of Congress.
“Of course, if developments emerge that cause a material reassessment of our outlook, we would respond accordingly."
"Policy is not on a preset course,” he said.
The Fed has cut interest rates in three quarter-point moves since July, putting the Fed’s benchmark federal funds rate in a range of 1.5%-2%.
Powell said this provides “some insurance” against “noteworthy risks” of sluggish growth abroad and “trade developments,” or the uncertainty caused by the Trump administration’s trade fights with China and other major trading partners.
The Fed is also worried about a lingering sense of Americans that inflation will be low going forward, he said.
Low inflation expectations have been a leading factor in the weak outlook for Japan and European economies.
“We will continue to monitor these developments and assess their implications for U.S. economic activity and inflation,” he said.
Powell told the lawmakers that fiscal policy would be needed to support the economy in any downturn.
He warned that the long-term federal budget “is on an unsustainable path.”
This might hamstring fiscal policymakers’ willingness and ability to help in any recession, he said.
Powell told the committee that the overall level of vulnerabilities facing the financial system “has remained at a moderate level.”
Investor appetite for risk is elevated in some asset classes, he said.
Debt loads of businesses is historically high but the ratio of household borrowing to income is low relative to pre-crisis level and has been gradually declining in recent years, he said.
Stocks were mixed on Wednesday afternoon with the Dow Jones Industrial Average up 55 points while the S&P 500 index was down 3.4 points.
https://www.marketwatch.com/story/feds- ... 2019-11-13
"Fed’s Powell says interest rates will be on hold absent a material deterioration in economy"
By Greg Robb
Published: Nov 13, 2019 2:38 p.m. ET
Federal Reserve Chairman Jerome Powell on Wednesday told Congress that interest rates are on hold absent a material deterioration of the economy.
“We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market, and inflation near our symmetric 2% objective,” Powell said, in remarks prepared for delivery to the Joint Economic Committee of Congress.
“Of course, if developments emerge that cause a material reassessment of our outlook, we would respond accordingly."
"Policy is not on a preset course,” he said.
The Fed has cut interest rates in three quarter-point moves since July, putting the Fed’s benchmark federal funds rate in a range of 1.5%-2%.
Powell said this provides “some insurance” against “noteworthy risks” of sluggish growth abroad and “trade developments,” or the uncertainty caused by the Trump administration’s trade fights with China and other major trading partners.
The Fed is also worried about a lingering sense of Americans that inflation will be low going forward, he said.
Low inflation expectations have been a leading factor in the weak outlook for Japan and European economies.
“We will continue to monitor these developments and assess their implications for U.S. economic activity and inflation,” he said.
Powell told the lawmakers that fiscal policy would be needed to support the economy in any downturn.
He warned that the long-term federal budget “is on an unsustainable path.”
This might hamstring fiscal policymakers’ willingness and ability to help in any recession, he said.
Powell told the committee that the overall level of vulnerabilities facing the financial system “has remained at a moderate level.”
Investor appetite for risk is elevated in some asset classes, he said.
Debt loads of businesses is historically high but the ratio of household borrowing to income is low relative to pre-crisis level and has been gradually declining in recent years, he said.
Stocks were mixed on Wednesday afternoon with the Dow Jones Industrial Average up 55 points while the S&P 500 index was down 3.4 points.
https://www.marketwatch.com/story/feds- ... 2019-11-13