Friday, August 23, 2019
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WHAT TO WATCH
All eyes will be on Federal Reserve Chairman Jerome Powell when he speaks at the Fed’s annual Jackson Hole Economic Policy Symposium.
Powell is scheduled to speak at 10 a.m. ET about the “Challenges of Monetary Policy.” Economists and investors have a wide range of expectations for Powell’s speech. “There’s a risk that, in his remarks at the Fed’s Jackson Hole Symposium Friday morning, Powell will push back on market expectations for another 100-plus basis points of rate cuts by end of 2020, but we are not holding our breath,” Capital Economics predicted in a note on Wednesday.
Powell’s speech comes on the heels of the Federal Open Market Committee’s (FOMC) release of its July meeting minutes on Wednesday afternoon. The minutes revealed that most Fed officials viewed the July rate cut as a mid-cycle adjustment as opposed to the beginning of a long-term easing campaign. At the end of the most recent FOMC meeting, the committee cut interest rates for the first time in more than a decade, and markets are expecting more cuts ahead. With current risks weighing on the U.S. economy, Fed officials stressed the need for policy flexibility. Two FOMC members dissented from the Fed’s latest rate-cut decision and felt that no rate cut was needed at the time.
“We will hopefully get more clarity on future rate cuts when Powell speaks on Friday but, at this point, there is little sign that the Fed is willing to push back on the markets. As such, another 25bp cut in September still looks like a good bet, if only because the Fed will not want to disappoint lofty market expectations,” Capital Economics explained.
Tesla to buy LG batteries for cars made in China: Tesla Inc. (TSLA) agreed to buy batteries from South Korea’s LG Chem Ltd. to be used in electric vehicles produced out in China, according to people familiar with the matter. Batteries made by LG Chem will be used initially in Model 3 cars manufactured in the plant near Shanghai, Tesla’s first outside of the U.S, said the people, asking not to be identified discussing a private matter. [Bloomberg]
Monopoly maker buys Peppa Pig for $4 billion: Monopoly maker Hasbro (HAS) is acquiring Entertainment One (ETO.L), the owner of beloved children’s brand Peppa Pig, for around $4 billion. Shares in Entertainment One surged by as much as 31% on Friday to an all-time record level, with analysts pointing to the potential synergies between the two companies. [Yahoo Finance UK]
Watchdog criticizes Google over high-risk bond ads: Britain’s top financial watchdog has slammed Google (GOOG) for failing to stop savers being exposed to adverts for high-risk investments. Searches for terms like “savings” and “high interest savings” on Google UK return adverts for mini-bonds, which are high-risk investment products. [Yahoo Finance UK]
HP CEO Dion Weisler to step down in November: HP Inc, the hardware business of Hewlett Packard Co, said on Thursday that Chief Executive Officer Dion Weisler is stepping down from the role in November.The company said Enrique Lores will succeed Weisler, effective from Nov. 1. Weisler, who has served as CEO since 2015, will step down to attend to a family health matter, the company said in a statement. [Reuters]
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