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The Fed rescued the US economy in 2019, but Trump wants more help in 2020 – CNN

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“Would be sooo great if the Fed would further lower interest rates and quantitative ease,” Trump tweeted on Tuesday, less than a week after the US central bank signaled it would be hitting the pause button on any more rate cuts going forward. “The Dollar is very strong against other currencies and there is almost no inflation. This is the time to do it. Exports would zoom!”
The President campaigned on promises of 3% growth, and is presiding over somewhat less than that, with a final report issued Friday showing respectable 2.1% growth for the third quarter. But the economy is getting rave reviews, with 76% of respondents in a new CNN poll conducted by SSRS rating economic conditions in the US today as very or somewhat good, significantly more than those who said so at this time last year (67%). This is the highest share to say the economy is good since February 2001, when 80% said so.
CNN Poll: US economy receives its best ranking in nearly 20 years
That’s in part thanks to the Fed’s success in keeping the US economy running smoothly over the last year, with unemployment hovering near 50-year record lows and the stock market hitting record highs.
Nevertheless, there are worrying signs. Business investment has fallen the last two quarters, the first decline in three years, according to the Bureau of Economic Analysis. Manufacturing layoffs have ticked up since the summer, and on Friday US Steel announced plans to close a mill near Detroit and cut 1,500 workers.
In response, the commander-in-chief has pushed unusual economic ideas, including publicly pressuring the Fed to cut rates to zero and even at times, suggesting rates should fall into negative territory. The Fed, however, has shown no signs of taking Trump’s suggestions.
At the Fed’s final meeting of the year, Powell and his colleagues signaled they would be sitting on the sidelines for some time. Powell said the three rates cuts this year were key decisions that helped to support the economy, which was showing signs of potentially tipping into recession over the summer.
“The Fed is basically saying, ‘Things are cool. We don’t really want to change things. We’re going to sit this one out for the foreseeable future,'” said Robert Frick, corporate economist with Navy Federal Credit Union. “That means they’ve done their job.”
Powell has himself argued it would take a lot for the Fed to move in either direction next year.
“We took strong measures,” said Powell at his press conference last week, referring to the cuts. “And we do believe that monetary policy operates with a long and variable lags and that it will take some time before the full effects of those actions are seen in the economy. So that’s one reason to hold back and wait.”
All of that could change if the President sparks a new trade war with Europe by imposing auto tariffs next year or if the economy starts to wobble from other shocks, including Boeing’s decision to shut down production of its 737 Max planes.
While the US economy has been a bright spot around the world, other countries have continued to struggle since the Great Recession a decade ago. It’s one of the reasons that inflation and wage growth have remained muted in the US.
“Things have changed radically over the last year,” said Frick. “I can remember when GDP was under 2% and analysts said, ‘There’s a recession around the corner.’ Now that our expectations — and indeed reality — has been taking down to a 2% growth level, we’re OK between 1.5% and 2%. We can go on for years at that rate.”
That may not be enough for Trump.
Trump has threatened to fire Powell on multiple occasions for not doing enough to juice the economy, a radical break with precedent walling off the central bank from political pressure. And while Powell, a sober former investment banker, has repeatedly insisted he was relying on data and not politics to make his decisions, the global economic turbulence stemming from Trump’s own trade wars prompted him to reverse his plans to raise rates this year and instead steadily drive them back down.
Even the President’s closest advisers acknowledge that appears to be over.
Stephen Moore, a conservative economic commentator who Trump considered for a Fed slot earlier this year, met with the President earlier this week at the White House to discuss the US economy and says Trump is still unhappy with the Fed and hankering for more cuts that he’s unlikely to get.
“Trump wants at least a couple more rate cuts from the Fed, and he’s not going to get it, that’s for sure,” said Moore, a former CNN contributor.
David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, said Trump’s public criticism may have made members of the central bank’s Federal Open Market Committee hesitate more than they would have before cutting rates this year to counter economic pressures from the President’s turbulent trade war with China.
“It made it harder, and perhaps some people on the FOMC were reluctant to cut rates because among other things they didn’t want to appear to be succumbing to the President’s pressure,” said Wessel. “But bottom line, other than making things uncomfortable, I’m not sure it made a hell of a difference. And a bit of the irony is the President got what he wanted, but he seems unable to declare victory.”

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Global stocks mixed after Wall St slips on economy worries – CTV News

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BEIJING —
European stock markets opened higher Friday while Asian prices followed Wall Street lower on worries economic recoveries might fade as coronavirus cases increase in the United States and some other countries.

London and Frankfurt gained in early trading and U.S. stock futures were lower. Shanghai, Tokyo, Hong Kong and Southeast Asia retreated a day after strong gains driven by the rise of U.S. tech stocks.

Global stock prices have recovered most of this year’s losses on optimism about a recovery from the coronavirus pandemic. But forecasters warn the rise might be too big and too fast to be supported by uncertain economic conditions.

“Stock markets just appear to be going through a consolidation phase in the run up to earnings season,” said Craig Erlam of OANDA in a report.

In early trading, the FTSE 100 in London gained 0.4% to 6,074.43 and Frankfurt’s DAX gained 0.4% to 12,544.91. The CAC 40 in France added 0.3% to 4,936.88.

On Wall Street, the future for the benchmark S&P 500 index rose 0.3%. That for the Dow Jones Industrial Average was 0.4% higher.

On Thursday, the S&P 500 index lost 0.6%. The Dow dropped 1.4%.

In Asia, the Shanghai Composite Index lost 1.9% to 3,383.32 and the Nikkei 225 in Tokyo shed 1.1% to 22,290.81. The Hang Seng in Hong Kong retreated 1.8% to 25,727.41.

The Kospi in Seoul lost 0.8% to 2,140.25 and Sydney’s S&P-ASX 200 declined 0.6% at 5,919.20. India’s Sensex lost 0.3% to 36,625.60. New Zealand, Jakarta and Bangkok retreated, while Singapore markets were closed.

On Thursday, three out of four stocks in the S&P declined. The biggest losers were oil companies, airlines and other stocks that are most heavily affected by a reopening and strengthening economy.

The Nasdaq composite, dominated by tech stocks that are seen as relatively resilient to the pandemic, added 0.5% to a record high.

“The market is concerned about the uptick in cases globally,” said Stephen Innes of AxiCorp. in a report. “Money is funneling into perceived safe areas of the market like tech, which should hold up broader indexes to a degree.”

U.S. government data showed 1.3 million workers filed for unemployment claims last week. That is down from 1.4 million the prior week and a peak of nearly 6.9 million in late March.

The improvements have helped validate investors’ optimism that the economy can recover as anti-virus controls are relaxed. That helped the S&P 500 rebound to within 7% of its record, after being down nearly 34%.

But economists point to a troubling slowdown in the pace of such changes, including moderating declines in the four-week average of jobless claims.

Investors are worried that worsening infection levels in the populous U.S. states of Florida, Texas and California could derail a recovery. Some states are rolling back their reopenings, while others are ordering people arriving from hotspots to quarantine.

Other countries including Brazil and South Africa also report rising case totals. Australia’s populous state of Victoria closed its border with neighbouring New South Wales this week to contain an outbreak.

In energy markets, benchmark U.S. crude lost 59 cents to $39.03 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, declined 50 cents to $41.85 per barrel in London.

The dollar declined to 106.81 yen from Thursday’s 107.95. The euro was little-changed at $1.1287.

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Asian stocks sink after Wall St losses on economy worries – CTV News

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BEIJING —
Asian stock markets followed Wall Street lower Friday on worries economic recoveries might fade as coronavirus cases increase in the United States and some other countries.

Benchmarks in Shanghai, Tokyo, Hong Kong and Southeast Asia retreated a day after strong gains driven by the rise of U.S. tech stocks.

Global stock prices have recovered most of this year’s losses on optimism about a recovery from the coronavirus pandemic. But forecasters warn the rise might be too big and too fast to be supported by uncertain economic conditions.

On Wall Street, the benchmark S&P 500 index lost 0.6% overnight.

“The market is concerned about the uptick in cases globally,” said Stephen Innes of AxiCorp. in a report. “Money is funneling into perceived safe areas of the market like tech, which should hold up broader indexes to a degree.”

The Shanghai Composite Index lost 1.2% to 3,408.93 and the Nikkei 225 in Tokyo shed 0.7% to 22,368.44. The Hang Seng in Hong Kong retreated 1.9% to 25,702.64.

The Kospi in Seoul lost 1.2% to 2,141.63 and Sydney’s S&P-ASX 200 declined 0.6% at 5,917.60. India’s Sensex opened 0.6% lower at 36,523.82. New Zealand, Jakarta and Bangkok retreated, while Singapore markets were closed.

On Wall Street, the S&P 500 declined to 3,152.05. The Dow Jones Industrial Average dropped 1.4% to 25,706.09.

Three out of four stocks in the S&P declined. The biggest losers were oil companies, airlines and other stocks that are most heavily affected by a reopening and strengthening economy.

The Nasdaq composite, dominated by tech stocks that are seen as relatively resilient to the pandemic, added 0.5% to a record 10,547.75.

U.S. government data showed 1.3 million workers filed for unemployment claims last week. That is down from 1.4 million the prior week and a peak of nearly 6.9 million in late March.

The improvements have helped validate investors’ optimism that the economy can recover as anti-virus controls are relaxed. That helped the S&P 500 rebound to within 7% of its record, after being down nearly 34%.

But economists point to a troubling slowdown in the pace of such changes, including moderating declines in the four-week average of jobless claims.

Investors are worried that worsening infection levels in the populous U.S. states of Florida, Texas and California could derail a recovery. Some states are rolling back their reopenings, while others are ordering people arriving from hotspots to quarantine.

Other countries including Brazil and South Africa also report rising case totals. Australia’s populous state of Victoria closed its border with neighbouring New South Wales this week to contain an outbreak.

In energy markets, benchmark U.S. crude lost 70 cents to $38.92 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, declined 63 cents to $41.72 per barrel in London.

The dollar declined to 106.94 yen from Thursday’s 107.95. The euro edged down to $1.1271 from $1.1286.

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Japan's economy to shrink at fastest pace in decades this fiscal year due to pandemic: Reuters poll – TheChronicleHerald.ca

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By Kaori Kaneko

TOKYO (Reuters) – Japan’s economy will shrink at the fastest pace in decades in the year through March 2021, forcing the government to compile another stimulus package to cushion the blow from the coronavirus pandemic, a Reuters poll showed on Friday.

Many respondents predicted the Bank of Japan’s (BOJ’s) next policy step would be to expand stimulus, but they do not see the pandemic triggering a banking sector crisis this year.

The world’s third-largest economy is forecast to contract 5.3% this fiscal year, a July 3-9 poll of over 30 economists shows, the most it has shrunk since comparable data became available in 1994.

It will rebound 3.3% next year, according to the poll.

The economy will grow at an annualised 10.0% pace in the current quarter of the calendar year 2020 after having shrunk 23.9% in the second quarter ended June, the poll shows.

“It would take two to three years for economic activity to return to normal levels in Japan as its overseas markets are likely to continue suffering from the spread of the virus,” said Atsushi Takeda, chief economist at Itochu Research Institute.

Two-thirds of economists polled expect Japan to compile its next stimulus package this year to ease the pain on companies and households. Japan has so far rolled out two packages totalling $2.2 trillion.

Arata Oto, market economist at Societe Generale Securities Japan, expects the next stimulus package to be worth about 1-2% of the country’s gross domestic product.

The package “would aim at accelerating Japan’s recovery … once there are more signs the pandemic is beginning to subside, or to help further cushion the blow from COVID-19 if the likelihood of a second wave heightens”, he said.

Globally, more than 12 million have been infected by the virus and over half a million people have died. In Japan, more than 21,000 people have been infected and over 900 killed.

Policy support for hard-hit firms should help counter worries about Japan’s financial system, over 90% of economists surveyed said.

Asked about BOJ’s next move, 26 of 40 economists said they expect it to expand its stimulus, with 18 saying it would happen this year and five predicting it would be next year.

At next week’s rate review, the BOJ is expected to roughly maintain its view the economy will gradually recover this year from the virus-led downturn, sources have said, even as fears of a second wave of infections cloud the outlook.

Japan’s core consumer prices, which exclude volatile fresh food but includes energy costs, will drop 0.4% this fiscal year and rise 0.3% next fiscal year, the latest poll showed.

(For other stories from the Reuters global long-term economic outlook polls package)

(Reporting by Kaori Kaneko; Polling by Daniel Leussink in Tokyo and Shaloo Shrivastava, Tushar Goenka and Manzer Hussain in Bengaluru; Editing by Leika Kihara and Himani Sarkar)

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