November 22, 2019
United States:
Trump’s Fed Pick Judy Shelton Cast Doubt on Central Bank Independence
“Judy Shelton, one of President Donald Trump’s most recent picks for the Federal Reserve board, challenged an article of faith regarding the U.S. central bank in private comments to a bank executive last month: that it should operate free of political influence. Shelton shared her views on monetary policy and the Fed with Beat Siegenthaler, global macro adviser for UBS Group AG, after speaking at an event on Oct. 18 in Washington on the sidelines of the International Monetary Fund annual meetings. “I don’t see any reference to independence in the legislation that has defined the role of the Federal Reserve for the United States,” Shelton told Siegenthaler, according to a transcript of the interview. Shelton confirmed she had spoken with Siegenthaler and a UBS spokesman declined to comment. The transcript was shared with the bank’s institutional clients, according to a person familiar with the matter. If people were to read the law, “they would see that it demands that the Board of Governors of the Federal Reserve work hand-in-hand with Congress and the president to meet certain strategic economic goals for the U.S.,” Shelton added. It is unusual for someone the president intends to nominate for the Fed board to speak publicly before the Senate considers her for the post, and even rarer for a Fed nominee to question the central bank’s independence. The remarks may complicate Shelton’s nomination, should Trump proceed to send it to the Senate. The White House has yet to officially nominate Shelton or another person Trump has said he intends to put on the Fed board, the St. Louis Fed’s director of research, Christopher Waller.”
Europe:
U.K. Output Weakest Since Just After Brexit Vote, PMI Shows
“The U.K. economy’s performance was the worst since July 2016 this month as uncertainty from Brexit and the snap election weighed on sentiment. IHS Markit’s composite Purchasing Managers Index slipped to 48.5, with readings for both manufacturing and services falling further below the 50 mark that separates expansion from contraction. The figures are a new flash estimate, produced a week earlier than normal, based on 85% of responses. The pound declined after the report, dropping 0.3% to $1.2877 as of 9:32 a.m. London time. Britain narrowly dodged a recession in the third quarter as factories stockpiled ahead of the Oct. 31 deadline, albeit less so than before the previous exit date. The process has now been extended again, and firms are clamping down on investment as they await a clearer picture of the U.K.’s future relationship with the European Union. That won’t take shape until after the Dec. 12 election. “The weak survey data puts the economy on course for a 0.2% drop in GDP in the fourth quarter,” said Chris Williamson, chief business economist at IHS Markit. It “also pushes the PMI further into territory that would normally be associated with the Bank of England adding more stimulus to the economy.” ”
Asia:
China’s Xi Stresses Need for ‘Mutual Respect and Equality’ in Trade Deal
“Chinese President Xi Jinping said his nation wants to work toward a phase one trade agreement with the U.S. on the “basis of mutual respect and equality,” his first comments on a partial deal that he could potentially sign with U.S. President Donald Trump. “We didn’t initiate this trade war and this isn’t something we want,“ Xi reiterated in a meeting Friday with prominent international visitors to Beijing including former U.S. Secretary of State Henry Kissinger. “When necessary, we will fight back, but we have been working actively to try not to have a trade war.” Just a few days ago, Trump said China wasn’t “stepping up to the level that I want” in the negotiations amid doubts about whether the two sides can hammer out a written agreement. On Wednesday, China’s chief trade negotiator, Liu He, indicated he was “cautiously optimistic” about reaching the first phase of a deal. Liu made the comments in a speech in Beijing on Wednesday ahead of the New Economy Forum, which is being organized by Bloomberg Media Group, a division of Bloomberg LP, the parent company of Bloomberg News. Some of the foreigners who met with Xi on Friday were also in Beijing to attend the forum.”
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