Date: September 5, 2019
Fed Officials Warn Consumer Is Alone in Carrying U.S. Economy
“Federal Reserve officials are weighing two competing forces in the U.S. economy: the resilience of the consumer versus the fallout from uncertainty around trade disputes and weaker global growth. “The consumer is now carrying all of the weight, or much of the weight, for growth going forward,” Federal Reserve Bank of New York President John Williams told reporters Wednesday after giving a speech in New York. “One thing, though, about consumer spending that you have to be careful about is it’s not really a leading indicator.” As threats from U.S.-China trade tensions have chilled business confidence and investment, consumers have been the main drivers of growth. There’s weakness surfacing in manufacturing and concerns brewing in financial markets that the world economy may be heading toward recession. The theme was echoed later on Wednesday by Dallas Fed chief Robert Kaplan, who told an audience in Toronto that he was watching to see if weak macroeconomic data filter into consumer attitudes. Kaplan, who isn’t a voter on the Federal Open Market Committee this year, said that if policy makers wait for consumer spending to weaken, it might be too late.”
Investors Pull $1.5 Billion From U.K. Equities as Brexit Bites
“Investors are voting with their feet as the Brexit impasse plays havoc with financial markets. Savers jettisoned 1.2 billion pounds ($1.5 billion) from U.K. equity funds in July, when Prime Minister Boris Johnson took power, according to figures published Thursday by the Investment Association, which represents fund managers. The withdrawals accelerated after outflows of 744 million pounds in June. “Investors reacted to the ratcheting up of uncertainty in the U.K., triggered by the change in political leadership,” said Chris Cummings, chief executive of the Investment Association. “Savers looked to weather the ongoing political and economic uncertainty by diversifying their investments and seeking out safe haven assets.” The outflows came despite a positive month on the equity markets: in July, the CBOE U.K. All Companies Index rose 1.9%. Instead, investors poured money into bonds. There were 2.2 billion pounds in net retail sales in July, the fifth straight month of positive flows.”
China, U.S. to Hold Trade Talks in October as Mistrust Remains
“China and the U.S. announced that face-to-face negotiations aimed at ending their tariff war will be held in Washington in the coming weeks, amid skepticism on both sides that any substantive progress can be made. Chinese Vice Premier Liu He agreed to a visit in “early October” during a telephone call on Thursday morning Beijing time with U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer, according to a statement from China’s Ministry of Commerce. A cautious statement from the USTR’s office confirmed that ministerial-level discussions will take place in “the coming weeks,” without specifying when. Any meeting in the immediate future would take place against the threat of increasing U.S. tariffs on Chinese goods, as President Donald Trump’s administration is set to ratchet up levies on Oct. 1 and in December. A rapid deterioration in relations last month has left global investors reeling amid increasing evidence that the conflict is harming the economy in both nations. “Neither China nor the U.S. want to be blamed by the rest of world for escalating the trade war and damaging the world economy,” said Zhou Xiaoming, a former commerce ministry official and diplomat. “But the talks don’t mean the two sides will inch closer or that their stances soften.” ”
Analyst Certification -The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer (s) or securities as at the date of this report. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation (s) or view (s) expressed by that research analyst in this research report.
Company Disclosure -The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.