Federal Reserve Cuts Interest Rates for Third Time in 2019

THE NEW YORK TIMES: The quarter-point cut comes as the economy continues to show signs of slowing, but the Fed signaled that it will pause to weigh incoming data before adjusting rates again.

WASHINGTON — The Federal Reserve cut interest rates Wednesday for the third time this year as slowing business investment, ongoing trade tensions and global weakness continued to weigh on the American economy.

But the Fed signaled that it will pause and assess incoming data before it considers lowering borrowing costs again. Fed Chair Jerome H. Powell said that while “there’s plenty of risk left,” some of it has subsided, pointing to the potential for a limited trade deal between the United States and China and a negotiated exit for Britain from the European Union.

“Overall, we see the economy as having been resilient to the winds that have been blowing this year,” he said. Wednesday’s decision to cut rates for a third time was made “to help keep the U.S. economy strong in the face of global developments and to provide some insurance against ongoing risks.” » | Jeanna Smialek | Wednesday, October 30, 2019

World Economy Is Sleepwalking into a New Financial Crisis, Warns Mervyn King

THE GUARDIAN: Past crashes spawned new thinking and reform but nothing has changed since 2008 banking meltdown, says former Bank of England boss

The world is sleepwalking towards a fresh economic and financial crisis that will have devastating consequences for the democratic market system, according to the former Bank of England governor Mervyn King.

Lord King, who was in charge at Threadneedle Street during the near-death of the global banking system and deep economic slump a decade ago, said the resistance to new thinking meant a repeat of the chaos of the 2008-09 period was looming.

Giving a lecture in Washington at the annual meeting of the International Monetary Fund, King said there had been no fundamental questioning of the ideas that led to the crisis of a decade ago.

“Another economic and financial crisis would be devastating to the legitimacy of a democratic market system,” he said. “By sticking to the new orthodoxy of monetary policy and pretending that we have made the banking system safe, we are sleepwalking towards that crisis.” » | Larry Elliott, Economics editor | Sunday, October 20, 2019

What Does History Tell Us about Brexit?

This week we asked two historians if the past might have any clues for the future of Brexit. We're joined by Charles Moore, biographer of Margaret Thatcher and Professor David Edgerton from Kings college London, author of The Rise and Fall of the British Nation.

Brexit: How 'Unlikely' Is a Deal by Oct. 31st? | DW News

British Prime Minister Boris Johnson has held fresh talks on Brexit with German Chancellor Angela Merkel and Irish Prime Minister Leo Varadkar. Varadkar said that big gaps remain between the UK and EU's positions on Brexit, raising more doubts about reaching a divorce deal by the UK's October 31st deadline to leave the European Union. Earlier, a source close to Boris Johnson told British media that Chancellor Merkel called a Brexit deal "overwhelmingly unlikely." That leak has prompted EU Council President Donald Tusk to warn Mr. Johnson that Brexit should not become a "blame game," and some critics have questioned whether Merkel in fact used those words.

How Would a No-deal Brexit Affect You?

A no-deal Brexit would see the UK leave the EU immediately. There would be no transition period and the relationship between the EU and the UK left undefined. Overnight, the laws that set out how businesses trade, how people and goods move across Europe would cease to exist. So how exactly would a no-deal Brexit affect you?

Here Comes the Trump Slump

THE NEW YORK TIMES: And he has only himself to blame.

When he isn’t raving about how the deep state is conspiring against him, Donald Trump loves to boast about the economy, claiming to have achieved unprecedented things. As it happens, none of his claims are true. While both G.D.P. and employment have registered solid growth, the Trump economy simply seems to have continued a long expansion that began under Barack Obama. In fact, someone who looked only at the past 10 years of data would never guess that an election had taken place.

But now it’s starting to look as if Trump really will achieve something unique: He may well be the first president of modern times to preside over a slump that can be directly attributed to his own policies, rather than bad luck.

There has always been a deep unfairness about the relationship between economics and politics: Presidents get both credit and blame for events that usually have little to do with their actions. Jimmy Carter didn’t cause the stagflation that put Ronald Reagan in the White House; George H.W. Bush didn’t cause the economic weakness that elected Bill Clinton; even George W. Bush bears at most tangential responsibility for the 2008 financial crisis.

More recently, the “mini-recession” of 2015-16, a slump in manufacturing that may have tipped the scale to Trump, was caused mainly by a plunge in energy prices rather than any of Barack Obama’s policies.

Now the U.S. economy is going through another partial slump. Once again, manufacturing is contracting. Agriculture is also taking a severe hit, as is shipping. Overall output and employment are still growing, but around a fifth of the economy is effectively in recession. » | Paul Krugman | Thursday, October 3, 2019

Stocks Slide as Evidence Mounts of Slowdown Fueled by Trade War

THE NEW YORK TIMES: A recent wave of selling has ended what was a relatively calm stretch for stock markets.

Stocks slid on Wednesday, a second day of selling that has shattered a relatively calm period for Wall Street, as investors faced new evidence that the world’s industrial sector is weakening in the face of the trade war.

The S&P 500 was down about 2 percent and on track for its worst day since late August. Stocks in Europe tumbled.

The selling this week began after a report on manufacturing activity showed that factory output in the United States slowed in September to levels last seen at the end of the financial crisis a decade ago. The data was fresh indication that the trade conflict between Washington and Beijing is chipping away at the industrial base in the United States, after having already dented factories in China, Japan and Germany.

Corporate reports on Wednesday, on auto sales and the airline sector, also contributed to the market’s dour mood.

“There’s no question that the global economy is slowing and that’s beginning to show up in U.S. data,” said Scott Clemons, chief investment strategist at private bank Brown Brothers Harriman. » | Matt Phillips and Amie Tsang | Wednesday, October 2, 2019

FTSE 100 Suffers Biggest Drop Since Early 2016

BBC: The FTSE 100 has seen its biggest fall in over three-and-a-half years.

The blue-chip index dropped over 3%, marking its worst day since January 2016. European and US stock markets also slid amid a global sell-off.

The falls came after poor US jobs and manufacturing figures and a World Trade Organization decision paving the way for $7.5bn in US tariffs on EU goods.

Analysts said these factors had sparked concern over the strength of the global economy.

On Tuesday, one of the most closely-watched US manufacturing figures, the Institute for Supply Management's (ISM) index of factory activity, dropped to its lowest level since June 2009.

Fresh figures on Wednesday showing a slowdown in jobs growth in the private sector in September accelerated concerns over the US economy. » | Wednesday, October 2, 2019