Fed seen holding rates steady as inflation watch continues

SAN FRANCISCO The U.S. Federal Reserve is expected to keep interest rates unchanged this week, deferring any possible increase until September or December, as policymakers hold out for more evidence of a pickup in inflation. Central to the debate at the Fed's July 26-27 policy meeting will be how to reconcile upbeat U.S. economic data, highlighted by strong job gains in June, with a global growth slowdown and other headwinds threatening the inflation trajectory. For San Francisco Fed President John Williams, one of the 17 members participating in the central bank's rate-setting deliberations, all that is needed is a bit more confidence that inflation is indeed headed toward the Fed's 2 percent target.The inflation measure the Fed prefers to track is currently at 1.6 percent. With monthly job gains well above the level needed to prevent an uptick in unemployment, and no signs of a rise in productivity, some Fed policymakers are likely to argue for a quick increase in rates to avoid a surge in inflation."That is the danger – and you can be sure that the hawks are going to be arguing that," said Alan Blinder, a Princeton University professor and a former Fed vice chairman. "I have a hunch that they will talking in July about September." Other policymakers, like influential New York Fed President William Dudley, have signaled they would rather wait for more tangible signs of a rise in inflation before pulling the trigger on a rate increase."There's not a lot of reason to raise rates until inflation goes up," said Kevin Logan, chief U.S. economist at HSBC in New York. The U.S. central bank is scheduled to issue its latest policy statement at 2 p.m. EDT (1800 GMT) on Wednesday. HEADWINDSThe Fed raised its benchmark overnight interest rate in December for the first time in nearly a decade, and signaled four rate hikes were coming in 2016 as it moved to "normalize" the ultra-stimulative monetary policy adopted in response to the 2007-2009 financial crisis. But headwinds in the global economy, financial market volatility and uncertainty over the impact of Britain's decision to leave the European Union forced it to delay a rate hike and scale back the number of projected hikes to two for the year. Still, absent a shock to markets or a reversal in U.S. economic data, even dovish policymakers like Dudley have signaled that their cautious approach to normalizing monetary policy likely allows for at least one rate hike this year. After Wednesday, the Fed has three more policy meetings scheduled this year - in September, November and December. A November rate hike is seen as highly unlikely, as that meeting comes one week before the U.S. presidential election.Economists polled by Reuters expect the Fed to hold rates steady until after the election."Rate normalization has fallen down the Fed priority list and will remain there until the dust is well settled on the financial markets and the economy," Jefferies economists predicted in a note last week. (Reporting by Ann Saphir; Additional reporting by Jonathan Spicer in New York; Editing by Paul Simao)

Read more

Wall St. pulls back from record; utilities slump

NEW YORK U.S. stocks fell on Tuesday as investors engaged in profit-taking to pull major indexes from record levels, while the trend of modest moves and low volume continued heading into the final trading day of the year.The day's losses were broad, with each of the ten primary S&P 500 sectors in negative territory. Utilities .SPLRCU - 2014's best sector performer - led the decline with a drop of 2.1 percent. Equities have enjoyed a solid rally of late, buoyed by strong economic data and the U.S. Federal Reserve's commitment to be "patient" about raising interest rates. The S&P 500 gained nearly 6 percent over the prior eight sessions and managed to score its 53rd record close of the year on Monday.The speed and scale of the rally provided incentive to take profits, and amplified volatility is possible this week with many market participants out for the holiday, which dampens volume. The stock market will be closed on Thursday for the New Year's holiday."It wasn’t going to take much to prompt the decline, it’s probably more resting than anything else. We’ve had a pretty significant move higher," said Stephen Massocca, managing director at Wedbush Equity Management LLC in San Francisco. "We’ve marched straight up from 1,970 or so to about 2,100 so it’s only natural that we are going to get a little bit of a pullback here."The Dow Jones industrial average .DJI fell 55.16 points, or 0.31 percent, to 17,983.07, the S&P 500 .SPX lost 10.22 points, or 0.49 percent, to 2,080.35 and the Nasdaq Composite .IXIC dropped 29.47 points, or 0.61 percent, to 4,777.44.In the latest economic data, consumer confidence rose slightly less than expected in December, while U.S. single-family home price appreciation slowed less than forecast in October. NeuroDerm Ltd (NDRM.O) soared more than 193 percent to $18.14 on heavy volume after it said data from a mid-stage study suggested that a higher dose of its Parkinson's drug could provide an alternative to treatments that require surgery. Civeo Corp (CVEO.N), which provides temporary housing for oilfield workers and miners, late Monday slashed its workforce and forecast revenue could fall by one-third as slumping crude prices force oil producers to cut costs. The stock plunged 52.6 percent to $3.92 on volume of about 56.2 million shares, the most active day in its history. Volume was light, with about 4.42 billion shares traded on U.S. exchanges, well below the 7.06 billion average so far this month, according to data from BATS Global Markets.Declining issues outnumbered advancing ones on the NYSE by 1,806 to 1,262, for a 1.43-to-1 ratio; on the Nasdaq, 1,671 issues fell and 1,031 advanced for a 1.62-to-1 ratio favoring decliners.The benchmark S&P 500 posted 25 new 52-week highs and 6 new lows; the Nasdaq Composite recorded 107 new highs and 39 new lows. (Reporting by Chuck Mikolajczak; Editing by Nick Zieminski)

Read more

Wall St. pulls back from record; utilities slump

NEW YORK U.S. stocks fell on Tuesday as investors engaged in profit-taking to pull major indexes from record levels, while the trend of modest moves and low volume continued heading into the final trading day of the year.The day's losses were broad, with each of the ten primary S&P 500 sectors in negative territory. Utilities .SPLRCU - 2014's best sector performer - led the decline with a drop of 2.1 percent. Equities have enjoyed a solid rally of late, buoyed by strong economic data and the U.S. Federal Reserve's commitment to be "patient" about raising interest rates. The S&P 500 gained nearly 6 percent over the prior eight sessions and managed to score its 53rd record close of the year on Monday.The speed and scale of the rally provided incentive to take profits, and amplified volatility is possible this week with many market participants out for the holiday, which dampens volume. The stock market will be closed on Thursday for the New Year's holiday."It wasn’t going to take much to prompt the decline, it’s probably more resting than anything else. We’ve had a pretty significant move higher," said Stephen Massocca, managing director at Wedbush Equity Management LLC in San Francisco. "We’ve marched straight up from 1,970 or so to about 2,100 so it’s only natural that we are going to get a little bit of a pullback here."The Dow Jones industrial average .DJI fell 55.16 points, or 0.31 percent, to 17,983.07, the S&P 500 .SPX lost 10.22 points, or 0.49 percent, to 2,080.35 and the Nasdaq Composite .IXIC dropped 29.47 points, or 0.61 percent, to 4,777.44.In the latest economic data, consumer confidence rose slightly less than expected in December, while U.S. single-family home price appreciation slowed less than forecast in October. NeuroDerm Ltd (NDRM.O) soared more than 193 percent to $18.14 on heavy volume after it said data from a mid-stage study suggested that a higher dose of its Parkinson's drug could provide an alternative to treatments that require surgery. Civeo Corp (CVEO.N), which provides temporary housing for oilfield workers and miners, late Monday slashed its workforce and forecast revenue could fall by one-third as slumping crude prices force oil producers to cut costs. The stock plunged 52.6 percent to $3.92 on volume of about 56.2 million shares, the most active day in its history. Volume was light, with about 4.42 billion shares traded on U.S. exchanges, well below the 7.06 billion average so far this month, according to data from BATS Global Markets.Declining issues outnumbered advancing ones on the NYSE by 1,806 to 1,262, for a 1.43-to-1 ratio; on the Nasdaq, 1,671 issues fell and 1,031 advanced for a 1.62-to-1 ratio favoring decliners.The benchmark S&P 500 posted 25 new 52-week highs and 6 new lows; the Nasdaq Composite recorded 107 new highs and 39 new lows. (Reporting by Chuck Mikolajczak; Editing by Nick Zieminski)

Read more

Trump defends 'star' tweet; Clinton says it's anti-Semitic

NEW YORK Republican presidential candidate Donald Trump on Monday defended a social media post he made two days earlier that included an image depicting Democratic rival Hillary Clinton against a backdrop of cash and a Star of David, while Clinton called the image anti-Semitic.In a tweet on Monday, Trump said he had not meant the six-pointed star to refer to the Star of David, which is a symbol of Judaism. Rather, he said, the star could have referred to a sheriff's badge, which is shaped similarly except for small circles at the ends of each of its six points, or a "plain star."The presumptive Republican nominee later released a statement saying Clinton's criticism of the image was an attempt to distract the public from "the dishonest behavior of herself and her husband."He was referring to a heavily criticized private meeting last week between former President Bill Clinton and U.S. Attorney General Loretta Lynch as an investigation into Hillary Clinton's use of a private email server while secretary of state nears a conclusion.His tweet came after Mic News reported on Sunday that the image attacking Clinton - which included the words: "History made" and, inside the star, "most corrupt candidate ever!" - had been shared on a neo-Nazi web forum called /pol/. Reuters confirmed the image was posted there on June 22 by viewing a link to an archived version of a /pol/ page, although the page has since been updated and the image removed."Donald Trump's use of a blatantly anti-Semitic image from racist websites to promote his campaign would be disturbing enough, but the fact that it's a part of a pattern should give voters major cause for concern," Clinton, the presumptive Democratic nominee, said in a statement emailed to reporters on Monday. The Nazis forced Jews to wear a Star of David on their clothing to identify themselves during the Holocaust.'DISHONEST MEDIA' Trump posted and deleted the tweet on Saturday, then tweeted a similar image in which the star was replaced by a circle. On Monday, he lashed out at journalists for continuing to report on the original tweet."Dishonest media is trying their absolute best to depict a star in a tweet as the Star of David rather than a Sheriff's Star, or plain star!" Trump wrote on Twitter.Saturday's incident was the latest departure by Trump from a recent effort to appease Republicans worried about his brash public persona by trying to appear more restrained. The Republican convention, where Trump is expected to be named the party's nominee for the Nov. 8 presidential election, is two weeks away. In June, Trump fired his campaign manager, Corey Lewandowski, and began using a teleprompter to make speeches, hoping to show his campaign could be more inclusive after he aroused controversy by referring to some Mexicans crossing the U.S. border illegally as "rapists," and his mocking of a disabled reporter, which Clinton has begun using in attack ads against him.Ed Brookover, a senior adviser to the Trump campaign, said in an interview on CNN on Monday that the campaign felt it had "corrected" the issue about the star by deleting Trump's original tweet. Brookover said the image's earlier appearance on the neo-Nazi forum was irrelevant. "These images get posted and reposted and reposted on social media on many forums," he said. "There was never any intention of anti-Semitism." (Reporting by Emily Flitter; Editing by Leslie Adler and Peter Cooney)

Read more

Adios, Three Amigos: Obama heads to last summit with Canada, Mexico

WASHINGTON/OTTAWA President Barack Obama will meet with leaders of Canada and Mexico on Wednesday for his final "Three Amigos" summit, a meeting that may signal how keen the North American partners are to tout trade at a time of rising protectionist sentiment.The Ottawa summit comes on the heels of Britain voting to leave the European Union after more than 40 years. It also falls ahead of a U.S. presidential election on Nov. 8 where presumptive Republican candidate Donald Trump has made stagnant wages and U.S. manufacturing job losses focal points of his insurgent campaign.The Brexit vote is bound to be an important theme for Obama's meetings with Mexican President Enrique Pena Nieto and Canada's Prime Minister Justin Trudeau.Canada had negotiated a trade deal with the EU that is slated to take effect next year. The Brexit could delay ratification, and hurt Canada's commodity-driven economy.The referendum results are also a setback to talks on a U.S.-EU trade deal. Mexico, which has a trade deal with the EU, has already prepared a draft proposal for one with the United Kingdom.At the summit, leaders will also look at how best to foster trade with each other, said Mexico's Finance Minister Luis Videgaray."One of the important issues, without doubt, is how to give a fresh impulse and greater value to North American integration," Videgaray said.All three are part of the Trans-Pacific Partnership, the 12-nation trade deal that Obama had cast as an update of the North American Free Trade Agreement. He wants to finalize the TPP as part of his economic legacy in Asia.The TPP has become a target of both the left and the right in the U.S. election, and Congress has been unenthusiastic about ratifying it thus far.LAST CHANCE WITH OBAMA The United States is the top export market for both Canada and Mexico. In 2015, U.S. trade with Canada totaled $663 billion and Mexico $584 billion.But even in Canada, only one in four people say the 22-year-old NAFTA deal is good for the country, a poll released on Monday found.The long-running Canada-U.S. battle over softwood lumber seems more likely than not to resume as early as October.Given all the controversy over trade, the leaders may decide to try to focus their summit talking points on other topics."I expect them to try and stay away from it," said Carlo Dade, director of the Canada West Foundation's Center for Trade and Investment Policy.For Trudeau and Pena Nieto, the summit is one last chance to make progress on lingering agenda items before Obama leaves the White House next January. The leaders are expected to discuss climate change and clean energy cooperation, areas of mutual interest and themes that may be central in Obama's address to the Canadian Parliament later on Wednesday.The three nations also plan to unveil a plan to fight heroin production.TRUMP QUESTION INEVITABLEAt a joint press conference, the leaders are likely to field questions about the upcoming U.S. election and its implications for both Canada and Mexico.It will also be Obama's first chance on an international stage to promote his recent endorsement of Democratic candidate Hillary Clinton, his former secretary of state. In March, Pena Nieto roundly condemned Trump, who has promised to build a wall on the U.S. border with Mexico to keep out illegal immigrants and drugs, and has complained about what he calls unfair trade. Mexico also named a new ambassador to aggressively promote its contributions to the U.S. economy.So far, Trump has been mostly silent on Canada. "That doesn't mean Canadians don't feel the sting" of his protectionist ideas, said Chris Sands, director of the Center for Canadian Studies at Johns Hopkins University's School of Advanced International Studies.Trudeau is likely to tread carefully so as to not endanger relations with a potential president."It's unlikely there will be any formal discussion of Trump, who of course is the elephant in the room. In some ways it's better if there isn't," said one official involved in the summit."The message the leaders will be sending is eloquent enough - the three nations are closely integrated and cooperate well and that's how the relationship should work," the official said, speaking on condition of anonymity.On trade, Pena Nieto and Trudeau are also cognizant that talk is cheap on the campaign trail."I have to tell my Canadian friends this often - it doesn't mean it will be the agenda once you get to the White House," said David Wilkins, the U.S. ambassador to Canada from 2005 to 2009 during the George W. Bush administration.Obama provides a good case in point. In his 2008 campaign, he demonized NAFTA, but once in office he began working on the TPP, a deal he has said would fix his concerns about NAFTA."There's very much a 'Keep calm and carry on' approach and we're going to ignore some of the domestic politicking and see what happens when it happens," said a Canadian source familiar with the summit talks. (Additional reporting by Ana Isabel Martinez and Simon Gardner in Mexico City; Editing by Mary Milliken)

Read more
Older Post