View from the US: Trump's war with the Fed

October 2019: what the US media says about Trump’s attacks on the Fed, Chinese shoppers, new tariffs on EU goods – and a sudden surge in a niche form of employment.

22 Oct 2019

Janette Saxer

Janette Saxer

Portfolio Director

Schroders

Are you an American citizen living abroad? Or simply interested in how the US media reports major financial stories? If so, read our monthly, two-minute round-up of major business and financial news – as viewed through the lens of US media

President Trump’s fury at the Fed

President Trump’s “now-frequent attacks on the central bank and Mr Powell personally carry a risk for the institution”, The New York Times said in a report on 11 September.

This followed several irate tweets by Mr Trump, one of which referred to Jerome Powell and his Fed colleagues as “boneheads”.

In a subsequent video published by Fox Business (18 September) Jerome Powell said: “I’m not going to change my practice of not responding to elected officials. I continue to believe that the independence of the Federal Reserve has served the public well”.

The NYT’s article concluded that Trump’s “regularly voiced opinions create a risk that anything the Fed does could be seen as either capitulation or resistance”.

The Wall Street Journal, meanwhile (26 September), cited academic research published by the National Bureau of Economic Research which “says the president’s attacks on the Fed and its interest-rate policy are influencing market expectations and the choices central bankers make”.

Chinese consumers take comfort in instant noodles

China’s army of consumers are pulling back, said The New York Times’s Alexandra Stevenson (2 October). “Forty years after China began its near-miraculous run as the world’s most powerful economic growth engine, its people are experiencing something new and unsettling: a feeling that the best times may be behind.”

Stevenson said the “$4.9 trillion force” of Chinese consumer power is battling a slowing economy, rising living costs and lower wage growth – against a backdrop of the trade war with the US.

Amid a range of data quoted to support its argument, the NYT cites an increase in the sale of instant noodles which is viewed as a negative indicator because “newly affluent Chinese would rather eat out”.

In a similar vein The Wall Street Journal scoured “alternative data” – “from energy consumption to photos taken from space” – in a piece challenging China’s official growth figures (8 September). It said “satellites monitoring Chinese industrial hubs suggested parts of the world’s largest trading economy were contracting” and that “beneath China’s stable headline economic numbers, there is a growing belief… that the real picture is worse”.

Nanjing-Road-China.jpg

Oil’s troubles: Exxon drops from S&P top 10 for the first time in 90 years

America’s shale boom is slowing “just when shale’s importance in global markets has reached new highs following an attack on the heart of Saudi Arabia’s oil infrastructure”, says The Wall Street Journal (29 September). This suggests “the technological and engineering advances that have allowed companies to unlock record amounts of oil and gas… have begun to level off.”

In another in-depth analysis on the oil industry, CNBC commented on 2 September that “oil and gas stocks’ weighting in the S&P 500 has not been this low since as far back as 1979”. Exxon Mobil dropped out of the S&P 500’s top 10 stocks for the first time in nine decades, it said, mentioning also carbon-reduction announcements by Amazon, Google and Duke Energy; and noting huge climate change protests taking place around the globe.

“Calling peak oil has been a fool’s errand for over a century,” it noted, before quoting an analyst who said: “Peak oil used to be a conversation about supply running out, but now it is about demand peaking.”

US tariffs on EU goods

American food retailers are “importing millions of dollars of extra wheels of Parmigiano and other cheeses” reported CNBC (5 October) following the 25% tariffs on cheese and other EU imports announced in retaliation for EU subsidies on aircraft.

Over 20,000 US stores sell EU cheeses, CNBC says. It quoted an importer saying “cheese hoarding cannot solve all the expected shortages… softer cheeses can’t be stored for nearly as long, so prices of those items will likely rise quickly”. The tariffs become effective on 18 October and will impact a range of EU goods including woollen clothing and Scotch whisky.

But as trade wars intensify, prospects for “trade experts” are bright

Good news for “trade specialists” and “trade compliance managers”, according to The Wall Street Journal (on 2 October). Quoting LinkedIn analysis, the Journal reported that “the average share of advertised jobs that were trade-related rose 29% in August compared with the same month last year”. A LinkedIn representative attributed this increase to “trade war escalation”.

It described new jobs for “managers who scour tariff-code changes to discern how the rules are shifting” and “consultants with MBAs who can help revamp and relocate global supply chains as the imposition of new US and Chinese tariffs disrupts the flow of goods”.

It’s an ill wind...

Author

Janette Saxer

Janette Saxer

Portfolio Director

Schroders

Janette joined in 2017 as a Director for the Schroders Wealth Management specialising in international wealth and investment management for both US resident and internationally based US clients. Janette has over 30 years’ experience in advising and growing clients’ wealth, working in partnership with clients’ other professional advisors. Prior to joining Schroders, Janette worked at the Royal Bank of Canada Wealth Management International in London as a Relationship Manager for US centric clients and previous to that was a Director at Barclays Private Banking. Janette is a Chartered Fellow of the Chartered Institute of Securities and Investment, a Registered Investment Advisor with the Securities Exchange Commission (SEC) in the USA and also holds the Uniform Investment Advisor Law qualification with the Financial Industry Regulation Authority (FINRA).

 

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