Overseas Headlines – October 05, 2017


Trump’s Short List for Fed Chair Features These Hawks and Doves

Here’s a look at the candidates President Donald Trump is considering over the next few weeks to nominate as chairman of the Federal Reserve and where they stand on monetary policy. Trump has met with Fed Chair Janet Yellen, National Economic Council Director Gary Cohn, Fed Board Governor Jerome Powell and former Governor Kevin Warsh as he considers his choice to head the U.S. central bank, three people familiar with the discussions said last week. Stanford University economist John Taylor is also on the list of recommendations put together by Trump’s advisers. There’s no clear front-runner and outlier candidates haven’t been ruled out. Trump has said he expects to make a decision on the Fed-chair search this month. That’ll kick off a months-long process of Senate confirmation before Yellen’s current term expires in February.



U.S. jobless claims fall; trade deficit narrows on strong exports

The number of Americans filing for unemployment benefits fell more than expected last week, but the continued impact of Hurricanes Harvey and Irma on the data made it difficult to get a clear picture of the labor market. Other data on Thursday pointed to underlying economic strength despite the weather-related disruptions. The trade deficit narrowed in August as exports of goods and services rose to more than a 2-1/2-year high, tempering expectations of a sharp slowdown in third-quarter GDP growth due to the storms. Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 260,000 for the week ended Sept. 30, the Labor Department said. Harvey and Irma along with Hurricane Maria affected claims for Texas, Florida, Georgia, Puerto Rico and the Virgin Islands, a Labor Department official said. Economists had forecast claims falling to 265,000 in the latest week. Claims shot up from a low of 236,000 in late August, hitting 298,000 at the start of September. As a result, Harvey and Irma are expected to cut into job growth in September.




Euro ministers to mull developing bailout fund into Europe’s Monetary Fund

Euro zone finance ministers will discuss on Monday ideas for a European Monetary Fund that would eliminate the need to involve the International Monetary Fund or the European Central Bank in future euro zone crises. The discussion will revolve around expanding the role of the euro zone bailout fund, the European Stability Mechanism (ESM), an idea clearly backed by Germany, France and the European Commission. The talks in Luxembourg will be part of a broader discussion among finance ministers from the 19 countries sharing the euro on how to better organize the single currency area and integrate it more deeply after Britain leaves the European Union in 2019. Other ideas include setting up a euro zone budget, appointing a euro zone finance minister and creating a euro zone subgroup in the European Parliament. “So far, the IMF has always contributed to the ESM rescue programmes in Europe, but a consensus is now growing that it will not play that same role again in a future crisis,” Klaus Regling, the head of the ESM, said in a speech in September. “The ESM could take over that role, as well as other tasks.”




World Bank raises 2017, 2018 East Asia growth forecasts, sees geopolitical risks

The World Bank raised its economic growth forecasts for developing East Asia and Pacific for this year and 2018, but added the generally positive outlook was clouded by risks such as rising trade protectionism and geopolitical tensions. The Washington-based lender now expects the developing East Asia and Pacific (EAP) region, which includes China, to grow 6.4 percent in 2017 and 6.2 percent in 2018. Its previous forecast in April was for 6.2 percent growth in 2017 and 6.1 percent growth in 2018. “The economic outlook for the region remains positive and will benefit from an improved external environment as well as strong domestic demand,” the World Bank said in its latest East Asia and Pacific Economic Update report on Wednesday. The outlook, however, faces risks from rising trade protectionism and economic nationalism, which could dampen global trade, as well as the possible escalation of geopolitical tensions in the region, the bank said. Increasingly hostile statements by U.S. President Donald Trump and North Korean leader Kim Jong Un in recent weeks have raised fears of a miscalculation that could lead to war, particularly since Pyongyang conducted its sixth and most powerful nuclear test on Sept. 3.