Defiant Fed boss says Trump won't make him quit - BBC News

The world's most powerful central banker has brushed off criticism from Donald Trump, saying he would not step down if the US president asked him to.

Federal Reserve chairman Jerome Powell told a hearing in Washington: "The law gives me a four-year term and I fully intend to serve it."

Mr Trump has criticised the Fed for not cutting interest rates.

But the president could soon get his wish, as Mr Powell also hinted at a cut soon to bolster the US economy.

Mr Powell is giving evidence to the House of Representatives Financial Services Committee, the first of two days of testimony on Capitol Hill.

He and the Fed have faced sustained criticism for not cutting rates, which Mr Trump blames for unnecessarily slowing the US economy. "Our Federal Reserve doesn't have a clue!" was one of the president's tweets.

Asked at Wednesday's hearing if Mr Powell would step down if requested, he replied "no". Pressed on whether he thought the president did not have the authority to remove him, he said: "What I have said is the law gives me a four-year term and I fully intend to serve it."

Disagreement over interest rate policy could ease, however, as Mr Powell signalled that a cut could come soon in remarks that sent the S&P 500 surging past 3,000 points for the first time and prompting a fall in the dollar.

He told the committee that "uncertainties about the outlook have increased in recent months". Although he expected continued US growth, he warned of economic weakness in other major economies, and a downturn in business investment driven by trade war worries.

"Concerns about the strength of the global economy continue to weigh on the US outlook," Mr Powell said.

"Apparent progress on trade turned to greater uncertainty, and our contacts in business and agriculture reported heightened concerns over trade developments."

The comments come despite last week's strong US jobs figures and an easing of trade tensions with China.

Analysis by Andrew Walker, BBC economics correspondent

As ever in a Federal Reserve Chair's remarks, there was no commitment to cut interest rates.

But the emphasis on economic uncertainties and below target inflation suggests an increasingly high probability that the Fed will do just that.

The concerns he raised included weaker momentum in some foreign economies which could affect the US. He also mentioned "government policy issues that have yet to be resolved".

His reference to trade developments was partly about the tension between the US and China. But there was one item on this list that isn't for the US to address- Brexit.

He didn't spell out the reasons, but the fact that he flagged it up indicates a concern that the UK's departure from the EU might have an adverse impact on the US economy.

The Fed has kept its current benchmark overnight interest rate in a range of between 2.25% and 2.50% since December. Mr Powell had first opened the door to a rate cut in comments made last month.

"Powell is setting it up, certainly for a July rate cut," said Jack Ablin, chief investment officer at Cresset Capital.

And Briefing.com analyst Patrick O'Hare said Mr Powell's comments "gave the market what it was looking for".

The financial markets are indicating that the Fed at its 31 July meeting will cut interest rates by 25 basis points, although some analysts have seen the possibility of a larger cut.

His appearance on Capitol Hill comes at a sensitive time for both the Fed and Mr Powell personally, with President Donald Trump lashing out in a series of tweets for not cutting interest rates and needlessly slowing the economy.

At the same time, some blame Mr Trump's own policies, in particular higher tariffs and his unpredictable approach to policymaking, for increasing the economic risks.

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2019-07-10 16:52:28Z
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S&P 500 hits 3,000 as Powell's comments raise rate cut bets - One America News Network

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., July 1, 2019. REUTERS/Brendan McDermid

July 10, 2019

By Medha Singh

(Reuters) – The benchmark S&P 500 briefly crossed the 3,000 points mark for the first time on Wednesday, as bets for a sharp interest rate cut later this month were boosted by Federal Reserve chairman Jerome Powell’s dovish comments.

The Nasdaq and the Dow Jones Industrials also hit all-time highs after Powell said the central bank stands ready to “act as appropriate” to support record U.S. economic growth.

Gains of near 1% each in Amazon.com, Apple Inc and Facebook Inc also lifted the Nasdaq and the S&P.

“Investors already got what they wanted when Powell’s statement was released. They got news that the Fed was ready to cut (interest rates) in July,” said Michael Antonelli, market strategist at Robert W. Baird in Milwaukee.

“What the bulls are really hoping for is that this is just a growth scare. That the Fed steps in with an insurance cut in July and that’s it, so the economy can continue at its ‘muddle-along’ pace of growth.”

Alluding to the strong jobs data that tempered hopes of a sharp rate cut at the end of the month, Powell said the report did not fundamentally change the central bank’s outlook and that there is important economic data before the meeting.

Traders raised the chances of a 50 basis point reduction to 23% following the comments, according to the CME Group’s FedWatch tool. They had nearly abandoned hopes of an aggressive reduction while still expecting the first U.S. rate cut since the financial crisis at the July 30-31 meeting.

Investors will now parse minutes from the Fed’s June policy meeting when it will be released at 2 p.m. ET.

At 11:06 a.m. ET, the Dow Jones Industrial Average was up 71.72 points, or 0.27%, at 26,855.21, the S&P 500 was up 9.57 points, or 0.32%, at 2,989.20. The Nasdaq Composite was up 37.25 points, or 0.46%, at 8,178.98.

Nine of the 11 major S&P sectors were higher, with energy, technology and communication services leading the gainers.

Energy stocks benefited from a jump in oil prices as U.S. crude inventories shrank more than expected and major producers evacuated rigs in the Gulf of Mexico ahead of an expected storm.

Shares of rate-sensitive banks retreated 0.89% after Powell’s comments. The financial sector shed 0.3%.

Generic drugmaker Mylan NV’s shares fell 4% after rival Amneal Pharmaceuticals Inc cut its 2019 core earnings forecast.

Advancing issues outnumbered decliners by a 1.76-to-1 ratio on the NYSE and by a 1.04-to-1 ratio on the Nasdaq.

The S&P index recorded 63 new 52-week highs and one new low, while the Nasdaq recorded 78 new highs and 28 new lows.

(Reporting by Medha Singh, Manas Mishra and Shreyashi Sanyal in Bengaluru; Editing by Sriraj Kalluvila)

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2019-07-10 15:45:00Z
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Oil Jumps On Hefty Crude Draw | OilPrice.com - OilPrice.com

The Energy Information Administration reported a huge oil inventory draw of 9.5 million barrels for the week to July 5, confirming and even exceeding the American Petroleum Institute’s estimate of an 8.13-million-barrel draw.

Today’s figure follows an estimated a 1.1-million-barrel draw in oil inventories for the last week of June.

In gasoline, the EIA reported a draw of 1.5 million barrels for last week, which compares with a draw of 1.6 million barrels a week earlier. Gasoline production averaged 10.4 million bpd, which compares with 9.9 million bpd a week earlier.

In distillate fuels, the authority reported an increase in inventories of 3.7 million barrels, versus a build of 1.4 million barrels for the previous week. Production last week averaged 5.4 million bpd, compared with 5.3 million bpd a week earlier.

As oil producers begin to evacuate staff from their platforms in the Gulf of Mexico ahead of a possible storm, oil prices continued upwards, booking their fourth consecutive daily gain in a row. Among the factors driving them higher, in addition to the now chronic Middle Eastern tension, was the news Russia’s oil production had fallen near a three-year low in June, later supported by API’s inventory report.

On the flip side for prices, worry about the direction the global economy is taking continues as persistent as the fears of an open military conflict in the Middle East only with a negative effect on prices.

As demonstrated after OPEC’s announcement about an extension to the 1.2-million-bpd production cuts into 2020, traders are too concerned with global economic growth and, consequently, crude oil demand. For now, this concern is keeping a lid on prices despite the recent rally.

At the time of writing, Brent crude was trading at US$65.98 a barrel, with West Texas Intermediate at US$59.52 a barrel. Both were up by almost three percent from yesterday’s close. This week’s hurricane updates will probably act as additional tailwind for WTI in the next few days and maybe into next week.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:

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2019-07-10 14:42:41Z
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Stocks Rally As Fed Chairman Speaks - NPR

Enlarge this image

Federal Reserve Chairman Jerome Powell speaks during a news conference on May 1 in Washington, D.C. He is testifying before Congress this week about economic challenges. Mark Wilson/Getty Images hide caption

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Mark Wilson/Getty Images

Stocks rallied Wednesday as Federal Reserve Chairman Jerome Powell testified about challenges the U.S. economy faces, adding to expectations that the central bank will cut interest rates later this month.

The Fed had hinted at such a cut in June.

Since then, "it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook," Powell said in prepared testimony for the House Financial Services Committee. "Inflation pressures remain muted."

Stock indexes jumped by more than half a percentage point in the opening minutes of trading on the prospects that the Fed will cut rates for the first time since the Great Recession. The Dow Jones Industrial Average was up 150 points.

Powell stressed that the U.S. economy is still growing, albeit at a slower pace, as a record-long expansion begins its 11th year. But he cautioned that business investment has slowed, possibly as a response to ongoing trade tensions and a slowdown in the global economy.

Last week, the Labor Department reported stronger-than-expected job growth in June. But while unemployment remains at near-record lows, job growth has slowed since last year.

The Fed chairman also highlighted longer-term challenges, including high and rising federal debt and relatively low labor-force participation among Americans in their prime working years.

President Trump has repeatedly argued that the U.S. economy would be growing faster if the Fed lowered interest rates.

"If we had a Fed that would lower interest rates, we'd be like a rocket ship," he told reporters last week. "But we don't have a Fed that knows what they're doing."

Powell has stressed the importance for the Fed of maintaining its independence from political pressure.

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2019-07-10 14:18:00Z
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Powell: 'Crosscurrents' are weighing on the economy, so Fed will 'act as appropriate' - CNBC

Business investments across the U.S. have slowed recently as uncertainties over the economic outlook linger, Federal Reserve Chair Jerome Powell said Wednesday in prepared testimony to the House Financial Services Committee.

"Inflation has been running below the Federal Open Market Committee's (FOMC) symmetric 2 percent objective, and crosscurrents, such as trade tensions and concerns about global growth, have been weighing on economic activity and the outlook," Powell said in his testimony, reiterating the central bank will "act as appropriate" to sustain the current economic expansion.

The Fed chief also noted that business investment has slowed down "notably," adding the outlook has not improved in recent weeks. Powell will deliver his testimony at 10 a.m. ET and answer questions from lawmakers.

Powell's prepared testimony appeared to confirm the market's rate-cut expectations. Stock futures turned positive after the remarks were released. The Dow Jones Industrial Average was headed for a gain of more than 100 points at the open.

"There is a risk that weak inflation will be even more persistent than we currently anticipate," Powell added, further bolstering the case for a rate cut.

"Overall growth in the second quarter appears to have moderated," Powell said in the prepared remarks. "Many FOMC participants saw that the case for a somewhat more accommodative monetary policy had strengthened. Since then, based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook."

Jerome Powell testifies before the Senate Banking, Housing and Urban Affairs Committee on his nomination to become chairman of the U.S. Federal Reserve in Washington, November 28, 2017.

Joshua Roberts | Getty Images

The U.S. and China have been engaged in a trade war for more than a year. Late last month, the two countries agreed to restart trade negotiations in an effort to end the spat. Meanwhile, data from overseas — especially in Europe — are showing weakening economic activity.

Powell noted the economy "performed reasonably well" in the first half of 2019, with consumer spending rebounding in the second quarter after being weak in the first quarter.

Powell's testimony comes after the Fed opened the door to cutting rates at its previous monetary policy meeting in June.

Markets cheered the central bank's remarks, with stock indexes reaching all-time highs last week. Traders are also pricing in a 100% probability of a rate cut before the end of July, according to the CME Group's FedWatch tool.

— CNBC's Jeff Cox and Patti Domm contributed to this report.

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2019-07-10 13:18:47Z
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Eat Smart kale salad bags recalled due to possible listeria contamination - CityNews

Eat Smart brand kale salad bags are being recalled due to possible listeria contamination.

The Canadian Food Inspection Agency says the 794-gram salad bags with best before dates of July 17 are being recalled in six provinces — Ontario, Quebec, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island.

The agency says the recall was triggered by test results and it is conducting a food safety investigation, which may lead to the recall of other products.

It says food contaminated with listeria may not look or smell spoiled but can still make people sick.

It says symptoms of illness can include vomiting, nausea, persistent fever, muscle aches, severe headache and neck stiffness, and pregnant women, the elderly and people with weakened immune systems are particularly at risk.

The agency says there have been no reported illnesses associated with the salad.

Click here for more information on the recall.

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July 10, 2019 at 04:01PM

Gold Prices Spike Above $1400 As Fed's Powell Highlights Growing Economic Uncertainty - Kitco News

(Kitco News) - Gold prices have pushed back above $1,400 an ounce reacting to dovish comments from Federal Reserve Chair Jerome Powell that signals looser monetary policy.

In his testimony before the U.S. House Committee of Financial Services, Powell highlighted growing risks to the U.S. economy.

“Many FOMC participants saw that the case for a somewhat more accommodative monetary policy had strengthened,” he said in his opening statement, which was released 90 minutes before the hearing. “Since then, based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook. Inflation pressures remain muted.

Gold prices were under pressure ahead of the report and have quickly reversed those loses. August gold futures last traded at $1,408.80 an ounce, up 0.64% on the day.

Powell noted that the domestic economy had performed reasonably well during the first half of the year; however, he added that there are growing global “crosscurrents,” creating uncertainty for the rest of the year.

“Growth indicators from around the world have disappointed on net, raising concerns that weakness in the global economy will continue to affect the U.S. economy. These concerns may have contributed to the drop in business confidence in some recent surveys and may have started to show through to incoming data,” he said.

Powell also pushed back against growing criticism from the White House and President Donald Trump.

“Congress has given us an important degree of independence so that we can effectively pursue our statutory goals based on objective analysis and data. We appreciate that our independence brings with it an obligation for transparency so that you and the public can hold us accountable,” Powell said

Powell also laid some of the risks to the domestic economy at the feet of the U.S. government, in particular growing government debt.

“A number of government policy issues have yet to be resolved, including trade developments, the federal debt ceiling…” he said. “I remain concerned about the longer-term effects of high and rising federal debt, which can restrain private investment and, in turn, reduce productivity and overall economic growth. The longer-run vitality of the U.S. economy would benefit from efforts to address these issues.”

On inflation, Powell warned that there is a risk that weak consumer prices could be even more persistent than the central bank currently expects.

Although Powell was more dovish than expected, the expectation for a 50 basis-point cut by the end of the month remain low. Avery Shenfeld, senior economist at CIBC Capital Markets, said that Powell's comments did nothing to shift expectations for a July rate cut.

"The Fed Chair had a chance to disabuse markets of the notion that a July rate cut is sure thing, and he didn't take that opportunity," he said. "All told, nothing in here to warn markets against assuming a July cut is coming, and if tomorrows core CPI readings don't show a reheating, a July rate cut could be a lock."

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July 10, 2019 at 07:36PM